"We have been monitoring the VR market over the past years very closely," Klemens Kundratitz, CEO at Embracer subsidiary Koch Media said in a statement on Wednesday.

"We feel that now is the right time to extend our groups activities into this fast-growing market."

The upfront payment consists of 40 million euros in cash and 10 million in newly issued Embracer B-shares.

"Subject to fulfilment of agreed earnings targets and release of certain titles during an up to 10 years period an earn-out consideration of a maximum of EUR 65 million may be paid," Embracer said.

Embracer, which develops and publishes PC, console and mobile games, has seen its share soar 133% this year, boosted by a strong earnings performance and a string of gaming studio acquisitions.

($1 = 0.8440 euros)

(Reporting by Johannes Hellstrom)