Swedish games giant Embracer Group has confirmed that it is divesting Gearbox Entertainment to 2K Games and Rockstar parent company Take-Two for $460m. The move comes just three years after Embracer purchased Gearbox for $1.3bn.

Embracer has been dramatically downsizing its company following a flurry of acquisitions and the collapse of a potentially “transformative” $2bn deal in 2023. 

According to a Verge report, the botched deal, which is rumoured to have involved the Lord of the Rings IP, fell through when Saudi-owned Savvy Games Group backed out. 

After the deal collapsed, the company said it was undertaking a “comprehensive” restructuring of the business.

Embracer sold Saber Interactive for $247m in February and laid off 1,400 people last year. The company also closed beloved Saints Row maker Voilition and Square Enix Montreal in 2023.

“Today’s announcement marks the result of the final structured divestment process and is an important step in transforming Embracer into the future with notably lower net debt and improved free cash flow,” Embracer CEO Lars Wingefors said in a statement. 

Wingefors outlined the strategic benefits of the divestment, stating: “Through this transaction, we are not only reducing business risk but also improving profitability. This move is part of our transition to becoming a leaner and more focused company, a key aspect of our future strategy.”