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Embracer's collapsed $2bn "major strategic partnership" was reportedly with Saudi Arabia funded Savvy Games

But still no details on why it walked away.

A new report from Axios has shed fresh light on Embracer Group's mysterious $2bn "major strategic partnership" which collapsed spectacularly back in May, causing its shares to drop by 40 percent and sending the company into cost-cutting mode.

At the time, Embracer - the enormous umbrella corporation which owns more than 100 studios including Borderlands developer Gearbox, publishing groups such as THQ Nordic, Koch Media and Saber Interactive, and franchises such as Tomb Raider and Deus Ex - explained it had reached a verbal commitment in October 2022 that would have resulted in more than $2bn "in contracted development revenue over a period of six years." However, at the 11th hour, Embracer said it "received a negative outcome from the counterparty".

While Embracer declined to confirm who its proposed partner was at the time of its announcement, a new report from Axios, citing "four sources familiar with the deal", claims it was the Saudi government-funded Savvy Games Group, the gaming-focused arm of the Saudi investment fund set up by the hugely controversial Prince Mohammed bin Salman. Axios says the proposed deal would have seen $2bn being invested in the development and publishing of games from Embracer, but adds its sources were "less certain about why Savvy walked away".

Savvy, of course, acquired an £840m stake in Embracer prior to the collapsed deal, giving it approximately 8.1 percent of shares and 5.4 percent of votes in the company - a move Embracer boss Lars Wingefors was quick to defend in light of the controversy surrounding Saudi investment in western companies, insisting the decision was "not taken lightly".

Saudi Arabia - and Prince Mohammed bin Salman in particular - has been blamed by the CIA for the assassination of Washington Post journalist Jamal Khashoggi, and his rule has seen the country keep its notoriously poor human rights record, with homosexuality still criminalised with punishments ranging from floggings to the death penalty.

The country's goal of investing 142bn riyals (£32bn) in the video game industry, as part of a wider initiative to diversify its economy away from oil, has seen Savvy aquire similar chunks of developers including EA, Activision Blizzard, Take-Two Interactive, Capcom, and Nintendo.

Since Embracer shared news of its collapsed $2bn deal in May, it has announced a "comprehensive restructuring program" involving job cuts and studio closures. It has also pledged to "exploit" its rights to Lord of the Rings and the Hobbit "in a very signficant fashion".

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