Saudi government-funded Savvy Games Group was reportedly the mystery party that pulled out of a $2 billion partnership with Embracer Group.
The Swedish company announced in May that a major deal had fallen through unexpectedly at the last minute, causing it to slash its earnings forecast, but it didn’t reveal who the partnership was with.
Axios reportedly learned the identity of the counterparty from several sources said to be familiar with the deal, although they weren’t able to confirm why Savvy backed out of the planned partnership.
According to Embracer CEO Lars Wingefors, the partnership collapsed following seven months of negotiations. The company said the deal would have included over $2 billion in contracted development revenue over a six-year period.
Savvy acquired an 8.1 percent stake in Embracer for $1 billion in June 2022. The Swedish company owns the entertainment rights for The Lord of the Rings as well as popular gaming franchises like Tomb Raider and Borderlands.
Embracer, which is due to report its first quarter earnings on August 17, announced in June a restructuring plan which would see some game studios closed and some projects cancelled.
Savvy was established using the Public Investment Fund (PIF), the sovereign wealth fund of Saudi Arabia that is central to crown prince Mohammed bin Salman’s goal of making the country’s economy less reliant on proceeds from oil.
The PIF has also been used to make significant investments in Nintendo, Electronic Arts, Take-Two and Activision Blizzard.
It was reported last September that Savvy planned to invest a further $37.8 billion in games industry acquisitions, including around $13 billion to acquire a leading game publisher.