Gaming giant Embracer snaps up Lord of the Rings rights in bargain deal
In a clear defiance to the slowing M&A landscape, Embracer Group has snapped up the intellectual property rights to The Lord of the Rings and The Hobbit literary works, as well as five other firms in a £645.7m deal.
The acquisitions include Middle-earth Enterprises, which owns the vast intellectual property catalogue and worldwide rights The Lord of the Rings trilogy and The Hobbit by J.R.R. Tolkien, as well as US group Limited Run Games, karaoke group Singtrix, PC game studio Tuxedo Labs and a company Embracer has chosen to keep secret.
Embracer said the upfront price for all of these items is SKr6bn (£478.3m), but the total consideration is expected to be around SKr8.1bn (£645.7m),
It is understood that the deal for the Tolkien fantasies include Amazon’s lucrative new series based on Lord of the Rings.
The first series is understood to have been one of the most expensive shows in history, costing approximately NZ$650m (£327.7m).
The purchase of the rights will mean that Embracer can explore further Tolkien remakes, including rights to iconic characters such as Gandalf and Aragorn.
The publishing group also recently bought the rights to Tomb Raider and Deus Ex, echoing moves seen by the likes of Microsoft in its $68.7bn mega-deal to snap up Call of Duty maker Activision Blizzard.
The Saudi Arabia wealth fund notably bought up a $1bn stake in Embracer earlier this year, deepening its push into the global games market.
Speaking with City PM, TMT analyst at PP Foresight Paolo Pescatore said that the deal shows that we are moving into a new phase of revenue generation beyond owning the carriage/distribution rights.
“The holy grail is creating the next biggest blockbuster; ownership of the IP around that franchise and monetising it across all channels as well as licensing and merchandising”, he said.
“Disney has a strong heritage in this area as underlined by its successful franchises like Marvel. This is something the likes of Netflix will need to start growing emphasis in order to diversify their businesses.”
ACF Investment Bank advised on the deal.