Saudi group reportedly abandoned $2 billion deal with the Lord of the Rings game company

Embracer Group was forced to halt its breakneck pace of acquisitions after a mysterious partner left a $2 billion deal intended to drive its continued gaming ambitions. Now, we might know who the partner is: Axios reported today that Savvy Games Group is the party that backed out of the deal in May. Savvy is owned by Saudi Arabia’s sovereign wealth Public Investment Fund and is the vehicle through which the Middle Eastern country funnels investments in the video games industry.

After the deal blew up, Embracer announced it was “restructuring” and that it would shut down or sell studios and pause some game development. In a filing, the group said it expects to finish that process on October 1st and has already begun its studio pruning.

Prior to the deal’s collapse, reports said Savvy had already invested $1 billion in Embracer, helping the Swedish publishing group go on an investment and acquisition spree that included Limited Run Games, IP rights for Lord of the Rings and The Hobbit, and big-name gaming properties like Tomb Raider and Deus Ex.

Embracer CEO Lars Wingefors issued a statement in 2022 insisting that the company’s Swedish values were “unwavering” after the group was criticized for accepting the Saudi group’s investment given the Saudi government’s repeated human rights violations. Embracer was quiet on the identity of its partner in the now-abandoned deal.

Why the deal actually collapsed is unknown, but it was meant to establish Savvy as a major gaming label, according to Axios. The Saudi Public Investment Fund, through Savvy, has been rising on the global gaming stage for a few years, snapping up esports firms and investing in well-known gaming companies like Nintendo, Take-Two Interactive, and Capcom.