NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN
The upfront equity purchase price amounts to
A company presentation of Vertigo Games will take place in connection with today's Annual General Meeting on
"Since we decided to focus exclusively on VR gaming in 2013, we have experienced rapid growth with the release of global hit Arizona Sunshine, and we have our most ambitious project to date, After the Fall. The VR gaming market seems to be on the edge of really taking off with the coming together of better, more accessible hardware and more and more high-quality content being released and announced. We believe that now is the time to accelerate and in Koch Media and Embracer we have found the perfect partner to do so together with", said Richard Stitselaar, CEO of Vertigo Games.
Dr. Klemens Kundratitz, CEO at Koch Media adds: "We have been monitoring the VR market over the past years very closely. We feel that now is the right time to extend our groups activities into this fast-growing market. I am sure that we are only at the beginning of the technological development of VR and what it offers players around the globe. We are delighted that with the acquisition of Vertigo Games, leading VR experts are joining our group. Together, we will push the boundaries of VR gaming even further, combining our strong global development and publishing network with their specialized VR games expertise."
The transaction in brief
· Embracer, through its wholly-owned subsidiary
· The earn out, which at yesterday's closing share price is worth a maximum of
· The main financial part of the Earn Out is based on the following schedule:
EUR million
Earnout consideration
EBIT target for the period Cash Embracer B- shares Total
≥ 100 15.0 10.0 25.0
≥ 95 12.5 10.0 22.5
≥ 90 10.0 10.0 20.0
≥ 85 7.5 10.0 17.5
· The Closing Consideration Shares and Earn Out Consideration shares are issued at a subscription price equal to the volume weighted average price per share during 20 trading days at Nasdaq First North Growth Market up to and including
· During the next Financial Year (
· During the period
· Net cash is estimated to
· The disclosed expectations of net sales and Operational EBIT for January -
· Vertigo's financial results relating to the earnout calculation will be prepared according to Vertigo Games' local GAAP accounting principles.
· Vertigo will be consolidated into Embracer's financial accounts as of
Background and rationale
On
Vertigo Games is a technologically advanced VR entertainment company that develops, publishes, and distributes to the consumer and out-of-home (arcades) market a growing portfolio of VR games, including evergreen brands like global hit Arizona Sunshine. Founded in 2008, it is based in
Since 2013, Vertigo Games has focused exclusively on VR, across all its business areas, to move early in the VR space and become a dominant player as the market takes off.
Vertigo Games comprise three business areas:
Arizona Sunshine, a four-player co-op zombie shooter built exclusively for VR, is Vertigo Games' largest success so far. Vertigo Games estimates it is the fourth most sold VR game in the last two years, having sold more than one million copies, and is currently the number one most played game in VR arcades. The game was released in
After the Fall is Vertigo Games largest development project so far and is one of the world's most anticipated VR releases, slated for release on all major VR platforms. The game has already received strong validation and support from leading VR platforms and will have one of the largest marketing campaigns ever for a single VR game. The game is an epic VR action first-person shooter with intense co-op gameplay at its core that pits up to four players against a vast, hostile VR world in a raging fight for survival - set in the ice-covered ruins of LA nearly 20 years after the apocalypse. After the Fall is developed exclusively for VR by
Vertigo Arcades is a leading distributor of proprietary and third-party VR titles to VR arcade operators globally. The company's titles are already available in 700+ locations in 40+ countries and account for estimated 25% of all playtime in Western VR arcades. Vertigo Arcades only account for a minor share of total net sales of Vertigo Games but was growing notably prior to a downturn with the Covid-19 outbreak.
Going forward, Vertigo Games will continue to operate independently within the Koch Media
VR gaming market outlook
Vertigo Games anticipates the VR gaming market to exhibit substantial growth in the coming years jointly driven by new high-quality headsets (both standalone and tethered) and increasing releases of high-quality VR games.
Purchase Price, Earn-Out Consideration, Lock-Up period and Clawback Right
Embracer acquires 100 percent of the share capital in Vertigo from the owners of Vertigo for an up front payment of
The agreed earn-out consideration that may be payable by Embracer, a maximum of
Issue of Closing Consideration Shares and Earn-Out Consideration Shares
The board of directors of Embracer has today resolved to issue 623,209 of the Closing Consideration Shares and the Earn-Out Consideration Shares pursuant to the authorization granted by the annual general meeting on
The Closing Consideration Shares represent 0.16 percent and 0.09 percent of the total number of shares and votes in Embracer, respectively, on a fully diluted basis. By issuing the Closing Consideration Shares, the number of shares and votes increase by 623,209. The share capital increases by approximately
The Earn-Out Consideration Shares represent 0.65 percent and 0.36 percent of the total number of shares and votes in Embracer, respectively, on a fully diluted basis. By issuing the Earn-Out Consideration Shares the number of shares and votes increase by 2,492,837. The share capital increases by approximately
In total, the Closing Consideration Shares and maximum Earn-Out Consideration Shares together represent 0.81 percent and 0.45 percent of the total number of shares and votes in Embracer, respectively, on a fully diluted basis. By issuing the Closing Consideration Shares and Earn-Out Consideration Shares the number of shares increases by 3,116,046 to 385,449,758 and the number of votes increases by 3,116,046 to 686,041,991 (divided among 33,399,137 A shares and 352,050,621 B shares). The share capital increases by approximately
Completion of the transaction
The transaction is not subject to any further resolution or approval and is completed as of
Advisors
For additional information, please contact:
Tel: +46 708 47 19 78
E-mail: lars.wingefors@embracer.com
About
With its head office based in Karlstad,
For more information, please visit: http://www.embracer.com
About Vertigo Games
Vertigo Games is a multi-platform VR entertainment company with offices in
Forward-looking statements
This press release contains forward-looking statements that reflect Embracer's intentions, beliefs, or current expectations about and targets for Embracer's and the group's future results of operations, financial condition, liquidity, performance, prospects, anticipated growth, strategies and opportunities and the markets in which the Company operates. Forward-looking statements are statements that are not historical facts and may be identified by words such as "believe", "expect", "anticipate", "intend", "may", "plan", "estimate", "will", "should", "could", "aim" or "might", or, in each case, their negative, or similar expressions. The forward-looking statements in this press release are based upon various assumptions, many of which are based, in turn, upon further assumptions. Although Embracer believes that the expectations reflected in these forward-looking statements are reasonable, it can give no assurances that they will materialize or prove to be correct. Because these statements are based on assumptions or estimates and are subject to risks and uncertainties, the actual results or outcome could differ materially from those set out in the forward-looking statements as a result of many factors. Such risks, uncertainties, contingencies and other important factors could cause actual events to differ materially from the expectations expressed or implied in this release by such forward-looking statements. Embracer does not guarantee that the assumptions underlying the forward-looking statements in this press release are free from errors and readers of this press release should not place undue reliance on the forward-looking statements in this press release. The information, opinions and forward-looking statements that are expressly or implicitly contained herein speak only as of its date and are subject to change without notice. Neither Embracer nor anyone else undertakes to review, update, confirm or to release publicly any revisions to any forward-looking statements to reflect events that occur or circumstances that arise in relation to the content of this press release.
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