Borderlands studio gets scooped up in deal worth up to $1.37 billion

One of the last large independent game developers will no longer operate on its own, as Borderlands maker Gearbox Entertainment has merged with Swedish holding company Embracer Group. The Embracer conglomerate already encompasses dozens of mid-size game studios under brands like THQ Nordic, Saber Interactive, and Koch Media.

The deal is initially worth $363 million in cash and stock, a number that could grow by up to roughly $1 billion if Gearbox meets some ambitious earnings goals over the next six years. That represents quite the windfall for Gearbox’s roughly 550 employees in Texas and Quebec, who have jointly owned the studio since its founding in 1999 and will now become significant shareholders in Embracer.

Under Embracer, Gearbox will continue to “operate as an independent studio” under the leadership of founder and CEO Randy Pitchford, the company said in a statement. Pitchford has been embroiled in a number of controversies in recent years over allegations of employee mistreatment, misappropriations of company funds, underpayment of talent, and even tales of leaving pornography at Medieval Times. Pitchford has denied these accusations.

“[Embracer founder and CEO] Lars [Wingefors]’s vision of Embracer as an allied partner group committed to fueling and accelerating the ambitions of a series of decentralized, successful entrepreneurial companies while magnifying the collective value and advantages of diversification across the entire group is the most brilliant strategy and design for short, medium, and long-term success in this industry that I have ever encountered in my 30 years in this industry,” Pitchford said in a statement regarding the merger. “The feeling at Gearbox is that we are just getting started and this transaction is not merely a stimulant for the talent of our employee-owned company, but a propellant for the exciting future we have planned.”

While best known for the development of the Borderlands series (which has now surpassed 60 million total sales), Gearbox has also expanded into publishing in recent years, putting its weight behind indie success stories such as Hello Neighbor, We Happy Few, and Risk of Rain 2. The studio also controls the rights to the Duke Nukem franchise following a bitter lawsuit and eventual settlement with creator 3D Realms.

Embracer’s suite of studios is responsible for a wide range of gaming franchises, including Saints Row, Dead Island, Darksiders, Metro, Time Splitters, and Goat Simulator, among many others.

The merger continues a recent trend of massive consolidation in the game industry, exemplified by Microsoft’s $7.5 billion purchase of Bethesda Softworks parent company Zenimax Media in September and EA’s recent $1.2 billion agreement to purchase British racing game studio Codemasters.