PAI sells Asmodee to Embracer in EUR 3bn deal

Greg Gille
16 December 2021

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PAI Partners has reached an agreement to sell Asmodee, a board game publisher and distributor, to Swedish gaming business Embracer Group.

PAI declined to comment on returns. According to a source close to the situation, the transaction values Asmodee at EUR 3bn, compared with EUR 1.2bn at entry in 2018.

The day-one consideration is approximately EUR 2.75bn in total, Embracer said in a statement. EUR 350m will be paid to PAI and certain minority shareholders in the form of Embracer shares, with the remaining EUR 2.4bn coming in the form of cash and debt refinancing. PAI would hold a stake of around 4% in Embracer, it said in a statement.

Asmodee's other minority shareholders will sell the majority of their shares upfront for cash, and retain a minority interest of approximately 4% subject to put and call options.

The transaction is expected to close in the first half of 2022.

Other 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.

The sale process for Asmodee attracted significant attention prior to launching, and ultimately progressed at a rapid pace. An array of financial sponsors including Silver Lake, CVC, Advent and KKR were already circling the asset in October, a month before the official launch of the process, run by Goldman Sachs and Natixis.

Carlyle and Embracer reached the second round of bidding earlier this month, as reported. CVC and KKR, previously reported as potential bidders, were no longer involved at that stage, according to sources – CVC did not proceed to the second round as its offer was not competitive enough, while KKR opted not to bid, they said.

At that point, bidders and lenders were trying to figure out which EBITDA figure to use after the pandemic provided a surge in board game sales, according to the aforementioned report. The deal was expected to be structured based on EBITDA of more than EUR 200m; Embracer and PAI are now reporting that pro forma adjusted EBITDA for this calendar year will be EUR 240m, implying a 12.5x entry multiple (rising to 15x if based on the EBITDA figure reportedly used to structure the deal).

Previous funding
PAI acquired a majority stake in Asmodee in 2018 alongside management, which retained a significant minority, at a EUR 1.2bn valuation. The acquisition of Asmodee was the first investment made by PAI Europe VII, which reached a final close on EUR 5.1bn earlier that year.

The deal generated a 4x money multiple for vendor Eurazeo, yielding a 35% IRR, Unquote reported at the time. The listed PE house had acquired Asmodee from Montefiore Investment in 2013 for EUR 143m; Montefiore originally bought the asset in a secondary buyout from Naxicap Partners in January 2008 for EUR 40m-50m.

PAI said that, under its ownership, Asmodee had grown significantly, with double-digit organic growth and 23 acquisitions completed. Since 2018, Asmodee sales have grown from EUR 500m to EUR 1.1bn and EBITDA from EUR 90m to EUR 240m.

Recent acquisitions under PAI ownership have included French board-game platform Board Game Arena, UK-based Libellud, Canada's Lion Rampant Imports and GoKids, a Taiwan-based board game publisher and distributor, according to Mergermarket data.

Company
Founded in 1995 and based in Guyancourt, Asmodee is a games publisher and distributor. According to a statement, it now sells 39 million products annually in more than 50 countries. Its portfolio of game titles includes Catan, Ticket to Ride, Pandemic, Dixit, Splendor, 7 Wonders, Just One, Dobble/Spot it!, Azul and Unlock!.

With a global workforce of more than 2,300 people, Asmodee operates in Europe, North America, South America and Asia.

People
PAI Partners – Gaëlle d'Engremont (partner and head of food & consumer sector).
Asmodee Group – Stéphane Carville (CEO).

Advisers
Vendor – Goldman Sachs (M&A); Natixis Partners (M&A); PwC (financial due diligence); Clifford Chance (legal); Linklaters (legal); Bain & Company (commercial due diligence); Arsène Taxand (tax).