Embracer's $2 billion Saudi deal collapsed — and its acquisition spree stopped dead

Savvy Games Group — the vehicle owned by Saudi Arabia's Public Investment Fund — had already invested $1 billion in Embracer, helping the Swedish publishing group run an acquisition and IP spree that took in Limited Run Games, the rights to The Lord of the Rings and The Hobbit, and big-name properties like Tomb Raider and Deus Ex. A further $2 billion partnership was meant to drive Embracer's continued ambitions and establish Savvy as a major gaming label. Embracer kept the partner's identity secret.

The deal blew up in May 2023. Embracer was forced to halt its breakneck pace of acquisitions and announced it was 'restructuring': it would shut down or sell studios and pause some game development, telling investors in a filing that it expected to finish the process on October 1 and had already begun pruning studios.

Only in August did Axios report the mysterious partner was Savvy. Why the deal actually collapsed remained unknown. The relationship had been controversial from the start: CEO Lars Wingefors issued a statement in 2022 insisting the company's Swedish values were 'unwavering' after criticism of accepting Saudi money given the Saudi government's repeated human rights violations.

Embracer halted its breakneck acquisition pace and announced restructuring: shutting down or selling studios and pausing some game development.

The studio-buying spree was predicated on the follow-on $2 billion injection rather than cash already secured.

Keeping the partner secret left investors unable to price the risk of the deal falling through.

When the money vanished, the only lever to pull was cutting the studios the spree had just bought.

An acquisition machine funded by one unsigned check is a house of cards — tie each purchase to money actually in the bank.

The restructuring was slated to complete on October 1, 2023, with studio pruning already underway — the wave that soon closed studios including Free Radical Design and Piranha Bytes and ended game services like Deus Ex Go. Embracer's acquisitions had made it a giant; the missing $2 billion made it a seller.