Asmodee draws Carlyle, Embracer Group in final stages

Amy-Jo Crowley and Francesca Veronesi
08 December 2021

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Private equity firm Carlyle Group and Swedish gaming business Embracer Group have reached the second round of bidding for French gaming publisher and distributor Asmodee, according to four sources familiar with the matter.

CVC and KKR, previously reported as potential bidders, are no longer involved, two of the sources said. CVC did not proceed to the second round as its offer was not competitive enough, while KKR opted not to bid, they said.

Asmodee, acquired by PAI Partners from Eurazeo in 2018 for EUR 1.2bn, was previously reported as being sold based on around EUR 200m in EBITDA, with an expected valuation of 13-15x EBITDA or EUR 2.6bn-3.0bn.

Bidders and lenders are now trying to figure out which EBITDA figure to use, one of the sources said. With current strong trading, the deal could be structured based on EBITDA of more than EUR 200m, or even EUR 210m, this source said.

It was previously reported that Asmodee's EBITDA number was a sticking point for buyers and lenders alike after the pandemic provided a welcome surge in its board game sales. Sales have continued to remain strong throughout 2021 with future growth hinged on digitalisation of board games in the medium term, as reported. Its EBITDA, including IFRS 16, was EUR 164m for the year ending March 2021, as reported. The conpany's revenues surpassed EUR 550m in 2019, according to press reports.

Embracer's appearance as a bidder has surprised the market, two of the sources said. Questions have been raised as to whether it is bidding with another sponsor for Asmodee as a whole, or on a standalone basis for part of its portfolio such as its digital offering, one of them said. Asmodee's valuation could be rich for Embracer compared to recent acquisitions it has made, this source said.

In its last financial update for the three months to 30 September 2021, Embracer said it currently has SEK 7.1bn in net cash and SEK 16.2bn (EUR 1.58bn) of liquidity including unused credit facilities.

Recent acquisitions by Embracer include that of Chinese gaming studio Jufeng via its DECA Games subsidiary and Russian gaming developer Bytex via its Saber Interactive subsidiary, both for undisclosed sums.

Final-round bids are expected to be collected before Christmas, one of the sources said. Goldman Sachs and Natixis Partners are sell-side advisers, as reported.

Founded in 1995, Asmodee operates through two divisions: proprietary publishing, which holds a wealth of IP, and its distribution arm, in which it works off licences with other creators, including names like Star Wars and Pokémon. Headquartered in Guyancourt, France, the company has operations in Europe, North America and China.

Carlyle and Natixis declined to comment, while Embracer, PAI, Asmodee, Goldman Sachs, KKR, CVC and Natixis Partners did not reply to a request for comment.