The Swedish conglomerate has been rocked by the failed deal with Saudi Arabia’s Savvy Games Group, and it’s no wonder that Embracer Group CEO Lars Wingefors has finally decided to take a rather drastic step.

The company will be divided into three parts. Asmodee Group will specialize in games, Coffee Stain & Friends will be responsible for indie games, and Middle-earth Enterprises & Friends will be behind the Lord of the Rings and Tomb Raider rights. All three companies will be listed on Nasdaq Stockholm, but Middle-earth Enterprises & Friends will remain under the current Embracer Group, which will be renamed. Embracer has signed a €900 million financing agreement with Asmodee, which will be used as part of the company’s debt repayment.

Lars Wingefors, Embracer’s CEO and largest shareholder, plans a long-term ownership structure and will remain an active, committed and supportive owner of all three companies. Shareholders representing over 50% of the capital and votes support the plan. Middle-earth Enterprises & Friends will focus on PC and console development and publishing, and the new structure will allow it to maximize the potential of franchises with very high strategic value. It will include numerous studios and IPs (Crystal Dynamics, Dambuster Studios, Eidos-Montréal, Flying Wild Hog Studios, Tripwire, Vertigo Games, Warhorse Studios, 4A Games; Dead Island, Killing Floor, Metro IPs…) and will be led by Phil Rogers (currently interim head of strategy at Embracer, who has led the completed restructuring process and was also head of the Crystal Dynamics-Eidos operating group; other executives in similar positions will report to him). Rogers, Stéphane Carville and Anton Westbergh will be part of the Embracer Group management team, but Wingefors will remain CEO, Johan Ekström is Group CFO and Deputy CEO, Careen Yapp is Chief Strategic Partnership Officer and Ian Gulam is Chief of Staff, Legal & Governance.

Here’s Wingefors’ open letter: “Everyone, my journey began more than 30 years ago when I started selling comic books to collectors, and I have always dreamed of building something meaningful and significant. For me, building a business is not about reaching a certain size or position, it is about the journey of taking many small steps and sometimes a few big ones to build something bigger. Today is clearly a day where we are taking a bigger step. I am so excited to imagine what the coming decades will bring. At the IPO in 2016, I made a promise to stakeholders that I would be around for at least 25 years – and I have 17 years left to fulfill that promise. It hasn’t always been a smooth ride, but I’m very proud of the achievements made possible by thousands of talented people who create exceptional content that entertains millions of people around the world. We have some of the most extraordinary companies and IPs in the games and entertainment industry within Embracer today, and it is my duty to ensure the best possible conditions for continued success. I believe the best is yet to come.

History has shown that diversified groups like ours can significantly improve their chances of success by adopting a more agile, fast-moving approach and focusing on well-defined core market segments. There are many inspiring examples from Sweden of how large companies have achieved greater success by breaking up into several separate, specialized companies. I am deeply motivated and inspired by these success stories and believe they offer valuable insights for our own strategic direction. The time is right for Embracer to become three public companies, each with sufficient scale, coherent strategies, specialized business models and visionary leadership teams. Rather than imposing conformity on thriving companies, we should foster an environment that amplifies existing success. I am confident that this will be easier with three distinct winning formulas in specific market segments. Asmodee is the world’s leading developer, publisher and distributor of tabletop games. Coffee Stain & Friends will be the leading and most innovative developer of community-driven games for PC/console and mobile. Middle-earth Enterprises & Friends will develop immersive, world-class entertainment IPs, including the iconic Lord of the Rings, leveraging in-house AAA capabilities and formidable partnerships.

I have always seen my role as Group CEO and Principal Owner as one of helping successful entrepreneurs, gamers, and business leaders become more successful. This will not change. I am also announcing today my intention to create a new long-term ownership structure. This will include the current holdings in Embracer (representing approximately 20% of the capital and 40% of the votes). I intend to remain a long-term, active, engaged and supportive owner of all three companies. This structure will be based on the values and ideas upon which Embracer was founded, trust, a long-term mindset and a desire to embrace different perspectives going forward. There is no one way to do business, but some business models are more similar than others. The same goes for entrepreneurs. The goals may be similar, but the approach is different. The similarities between the companies that will make up Asmodee, Coffee Stain & Friends, and Middle-earth Enterprises & Friends are striking, but so are the differences when it comes to go-to-market strategies and business profiles. All companies have a bright future ahead of them as they perfect what works for each of them and continue to collaborate where it makes sense. There is significant untapped potential within the Group that I am confident the new structure will unleash. It will give each individual and each team the opportunity to grow and excel in their careers, as well as provide them with their own leadership and strategic direction.

This is the beginning of a new chapter, a chapter in which I intend to remain an active, committed and supportive shareholder of all three new companies, with an evergreen horizon. The move to three independent companies reinforces Embracer’s vision of supporting entrepreneurs and creators with a long-term mindset to continue delivering memorable experiences and entertainment around the world. I would especially like to thank all of our employees who have stood with us through the challenges of the past. Today is the first day of a new journey, let’s take it together and create the future,” Wingefors wrote.

Source: Deadline