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Exclusive-Sweden’s Embracer weighs options for Borderlands maker Gearbox Entertainment –sources

By Amy-Jo Crowley and Supantha Mukherjee

LONDON (Reuters) -Embracer is considering options for its U.S. game developer Gearbox Entertainment including a sale as Europe’s largest gaming company looks to shore up its finances, three people familiar with the matter told Reuters.

The maker of a new Tomb Raider video game, whose shares are traded in Stockholm, is working with Goldman Sachs and Aream & Co to explore a sale, the people said. Embracer last year bought several development studios and the intellectual property rights to a number of games including a new Tomb Raider game.

Embracer is weighing selling the unit, which is known for first-person shooter game Borderlands, after receiving interest from third parties, two of the people said.

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Officials from Embracer and Goldman Sachs declined to comment. Aream did not respond to requests for comment.

⁠Embracer shares turned positive and spiked as much as 5% higher following the news, closing at SEK 27.40 on Monday.

In June Embracer’s announced a restructuring to reduce its net debt to less than SEK 10 billion ($903 million) by the end of its financial year from SEK 16.7 billion at the end of June. The plans, which include studio closures, cancelled projects and layoffs, follows what CEO Lars Wingefors described as a "challenging year" for the company.

Embracer, majority owned by founder Wingefors, purchased Gearbox in February 2021 in a deal that valued the business at up to $1.4 billion at the time.

Gearbox marketing materials are already available for potential buyers, which consist mainly of international gaming groups, said two of the people.

The sources, who requested anonymity as the matter is confidential, cautioned a deal may not happen.

Gearbox, which sits under Embracer’s PC console games segment, published its latest title Remnant 2 last month, which topped U.S. charts for July.

Embracer, which has a catalog of over 900 owned franchises, announced a review of its business to navigate challenging economic conditions last November, which could result in spin-offs of units. In May, Embracer said it had reached a verbal commitment with an undisclosed party the previous October that would have resulted in more than $2 billion "in contracted development revenue" over six years. However, at the final hour it said it "received a negative outcome from the counterparty", causing its shares to drop by more than 40%.

($1 = 11.0786 Swedish crowns)

(Reporting by Amy-Jo Crowley; editing by Anousha Sakoui, Jason Neely and David Evans)