Embracer Group confirmed on May 20, 2026 that it will break itself into two independently listed companies, spinning off a new entertainment business called Fellowship Entertainment onto Nasdaq Stockholm. The move hands the new company control of some of Embracer’s most recognizable franchises, including Tomb Raider, The Lord of the Rings, and Metro, while a leaner parent keeps its existing name, its existing stock ticker, and a roughly 35-studio publishing arm built around THQ Nordic.
The Fellowship Entertainment listing is targeted for calendar year 2027, and the group says it will begin reporting through two distinct business segments starting in the first quarter of its 2026/27 fiscal year. The announcement landed alongside full-year results that showed adjusted EBIT falling 68% year-over-year – the financial backdrop against which the Swedish publisher is now betting that two smaller, more focused businesses can outperform one sprawling conglomerate.
For an industry still absorbing Ubisoft’s ongoing crisis and Xbox’s latest layoffs, this breakup is the clearest sign yet that publishers built through years of debt-fueled acquisitions are being taken apart, one segment at a time. Here is what was announced, why it happened now, and what it means for the games and studios involved.
Inside Fellowship Entertainment: Tomb Raider, The Lord of the Rings and More
Fellowship Entertainment is being positioned as an IP-led entertainment company built around game development, publishing, and licensing. Its franchise roster includes Darksiders, Dead Island, Kingdom Come Deliverance, Metro, Remnant, The Hobbit, The Lord of the Rings, and Tomb Raider – a lineup Chair Lars Wingefors has previously called among the most undervalued assets in the games industry.
Eight studios move to the new company: 4A Games, Crystal Dynamics, Dambuster Studios, Eidos-Montréal, Fishlabs, Flying Wild Hog, Gunfire Games, and Warhorse Studios. Fellowship also picks up Dark Horse Media, the Middle-earth Enterprises licensing business, Redoctane Games, and a new publishing group built from Plaion and Deep Silver staff.
On an illustrative historical basis, the new entity generated SEK 4,393 million – roughly $457 million at current exchange rates – in net sales for fiscal 2025/26, with a headcount of 2,169 as of March 31, 2026. Its stated ambition is a multi-year release pipeline delivering at least two major titles annually starting in fiscal 2027/28, according to Embracer Group’s official announcement.
What Stays With the Parent Company
The remaining business keeps the larger share by revenue: SEK 11,544 million, or about $1.2 billion, in FY2025/26 net sales and 3,518 employees, versus Fellowship’s SEK 4,393 million and 2,169 employees. It is a split where the newer, smaller entity carries the marquee names, while the continuing company carries the bulk of the headcount and revenue.
Studios staying under the Embracer name include Aspyr, Beamdog, CrazyLabs, Deca, Demiurge, Limited Run Games, Milestone, the 35-plus-studio THQ Nordic label, Tripwire, and Vertigo Games, spanning franchises such as Arizona Sunshine, Biomutant, Destroy All Humans!, Desperados, Gothic, Killing Floor, Kingdom of Amalur, MX vs. ATV, Ride, and Wreckfest.
Management describes the post-split strategy as “opportunistic bolt-on M&A,” targeting niches in mobile, distribution, retro catalog titles, and remakes and remasters, rather than the large speculative acquisitions that defined the company’s buying spree between 2018 and 2022.
The Numbers Behind the Split: A Brutal Fiscal Year
Group-wide, fiscal 2025/26 net sales fell 25% year-over-year to SEK 15,906 million, and adjusted EBIT dropped 68% to SEK 905 million, a 6% margin. The fourth quarter alone, covering January through March 2026, brought net sales of SEK 3,931 million, down 24% year-over-year, with adjusted EBIT of SEK 360 million, down 64%, according to Embracer Group’s Q4 interim report.
| Metric (FY2025/26) | Fellowship Entertainment | Remaining Embracer Group |
|---|---|---|
| Net sales (illustrative) | SEK 4,393M (~$457M) | SEK 11,544M (~$1.2B) |
| Headcount (Mar 31, 2026) | 2,169 | 3,518 |
| Core studios | 4A Games, Crystal Dynamics, Eidos-Montréal, Warhorse, 4 more | THQ Nordic (35+ studios), Aspyr, Milestone, Tripwire |
| Flagship franchises | Tomb Raider, The Lord of the Rings, Metro, Darksiders | Gothic, Kingdom of Amalur, Wreckfest, Killing Floor |
| Nasdaq Stockholm listing | New listing targeted 2027 | Retains existing EMBRAC B listing |
| Post-split leadership | CEO Phil Rogers, COO Lee Guinchard | New CEO/CFO search underway; Müge Bouillon as Deputy CEO |
Despite the profit collapse, the balance sheet held up: net cash of SEK 3.8 billion and an equity ratio of 73% on SEK 19.5 billion of total equity. Free cash flow for the full year was a thin SEK 50 million, though operating cash flow reached SEK 2,465 million. Management also announced a share buyback program worth up to $80 million, or SEK 750 million, running through March 2027, and guided for at least SEK 1.0 billion of Cash EBIT in fiscal 2026/27.
Three Years in the Making: From Saudi Deal Collapse to Breakup
The Fellowship Entertainment spinoff is not a sudden decision. It is the third and final piece of a restructuring Embracer Group first announced in April 2024, itself a direct response to a much larger crisis in 2023.
That crisis began in May 2023, when the company disclosed the collapse of a $2 billion financing agreement with Savvy Games Group, an investment vehicle backed by Saudi Arabia’s Public Investment Fund. The fallout was severe: by the end of fiscal 2023/24, the workforce had been cut from roughly 15,700 to just under 7,900 employees, 44 studios were closed, and about 80 in-development projects were canceled, including Deus Ex and TimeSplitters.
In April 2024, leadership announced plans to break the company into pieces built around its most valuable brands. Asmodee Group, the tabletop games business, separated as an independent public company on February 7, 2025. Coffee Stain Group, home to community-driven titles from Coffee Stain Studios and Ghost Ship Games, spun off as a standalone entity on December 11, 2025. Fellowship Entertainment – known for most of that period only by the working title “Middle-earth Enterprises & Friends” – is the third and final piece, with its full structure and permanent name confirmed on May 20, 2026.
| Date | Milestone |
|---|---|
| May 2023 | $2 billion Savvy Games Group financing deal collapses |
| June 2023 | Company-wide restructuring announced |
| By March 2024 | Workforce cut from ~15,700 to ~7,900; 44 studios closed; ~80 projects canceled |
| April 2024 | Plan announced to split into three standalone businesses |
| February 7, 2025 | Asmodee Group separates as an independent public company |
| December 11, 2025 | Coffee Stain Group spins off as a standalone entity |
| May 20, 2026 | Fellowship Entertainment name and structure confirmed; FY25/26 adjusted EBIT down 68% |
| Q1 FY2026/27 | Segment reporting begins for Fellowship Entertainment and the parent company |
| Calendar year 2027 | Fellowship Entertainment targeted to list on Nasdaq Stockholm |
New Leadership for Two Companies
The spinoff comes with a full leadership reshuffle. Phil Rogers, the current CEO, moves to lead Fellowship Entertainment after the separation, with COO Lee Guinchard following him into the same role at the new company. Group CFO Müge Bouillon takes on a dual role, adding the title of Deputy CEO of the remaining business as recruitment begins for its new chief executive and chief financial officer.
The board, led by Chair and largest shareholder Lars Wingefors, has framed the split around sharper accountability – giving each business its own leadership and mandate rather than asking one executive team to manage both a prestige-IP publisher and a 35-studio catalog business at the same time. Wingefors has separately pointed to Fellowship’s franchise base, anchored by Tomb Raider and The Lord of the Rings, as undervalued relative to peers, a central argument for why splitting the group should unlock more value than keeping it intact.
How Investors Reacted to the Announcement
Shares rose as much as 9% in early trading on May 20, 2026, before reversing to trade about 1.5% lower by mid-morning – a sign that investors were still working out whether a two-company structure solves the underlying profitability problem or simply repackages it into two smaller ones.
As of mid-July 2026, the stock, trading as EMBRAC B on Nasdaq Stockholm, sat around SEK 67.5 a share, within a 52-week range of SEK 43.00 to SEK 112.36, according to stock data compiled by StockAnalysis. Shares are down roughly 35.5% year-to-date, leaving the combined group with a market capitalization of about SEK 14.93 billion, or roughly $1.55 billion, down 38.8% from its prior valuation. Analyst consensus remains a “Buy” rating with a 12-month price target of SEK 78.90, implying about 15% upside from current levels.
Embracer Group vs. the Rest of the Public Games Industry
Even before the split, a roughly $1.55 billion market capitalization put Embracer Group well behind other listed game publishers. Take-Two Interactive, owner of Rockstar Games and 2K, carries a market cap of about $44.01 billion, nearly 30 times larger, according to StockAnalysis market-cap data. CD Projekt, maker of Cyberpunk 2077 and The Witcher, sits at around $6.22 billion, roughly four times larger despite releasing far fewer titles per year, per CompaniesMarketCap.
| Company | Market cap (mid-July 2026) | Flagship franchises |
|---|---|---|
| Take-Two Interactive | ~$44.01 billion | Grand Theft Auto, Red Dead Redemption, NBA 2K |
| CD Projekt | ~$6.22 billion | Cyberpunk 2077, The Witcher |
| Embracer Group (pre-split) | ~$1.55 billion | Tomb Raider, The Lord of the Rings, Gothic, Metro |
| Ubisoft | ~$0.8 billion | Assassin’s Creed, Rainbow Six, Far Cry |
The Swedish publisher is not alone at the bottom of that table. Ubisoft has seen its own market capitalization collapse amid a separate multi-year crisis. Splitting into a prestige-IP business and a catalog business is, in part, a bet that investors will pay a premium for a focused Tomb Raider-and-Lord-of-the-Rings publisher that they were not paying for a sprawling, 100-plus-studio conglomerate carrying mobile games, distribution units, and AAA development side by side.
A Wider Pattern: Gaming’s Consolidation and Breakup Era
This breakup fits a broader pattern reshaping the games industry through 2026. Ubisoft has spent the past year cutting costs and courting outside investment after its own stock crash. Electronic Arts is in the process of going private in a deal valuing the company near $55 billion, pending regulatory clearance. Microsoft’s Xbox division cut thousands of jobs and divested several studios earlier this year as part of its own restructuring.
What separates this approach is direction. Rather than being acquired, taken private, or absorbed, the company is deliberately shrinking into smaller, independently listed pieces. Asmodee’s tabletop games business and Coffee Stain’s indie-leaning catalog have already gone their own way; Fellowship Entertainment is next. The wager is that focused, single-mandate public companies will trade at healthier multiples than one company trying to be a tabletop publisher, an indie label, a mobile games shop, and a AAA studio group all at once.
What Fellowship Entertainment Must Deliver in 2027
Fellowship inherits a release slate that will define its first year as an independent company. Guidance for fiscal 2026/27 points to Gothic 1 Remake and Warhammer 40,000: Dawn of War IV in the first half of the year, followed by two higher-profile releases in the second half: Metro 2039 and Tomb Raider: Legacy of Atlantis.
Both anchor titles carry outsized weight. Metro is one of the group’s most consistent-selling franchises, while a new mainline Tomb Raider game is the clearest test of whether Crystal Dynamics and Eidos-Montréal can still deliver a AAA release on schedule after years of turbulence inside the wider group. Fellowship’s stated target of at least two major releases per year starting in FY2027/28 will be judged directly against how these two titles land critically and commercially.
Risks That Could Derail the Spinoff
Corporate spinoffs in games are not guaranteed to succeed. Asmodee and Coffee Stain Group are still less than 18 months removed from their own separations, and neither has a multi-year public trading record yet, which makes it hard to say whether splitting up the group actually improves shareholder returns or simply moves the same problems into smaller boxes.
Fellowship also inherits execution risk from studios with recent troubled records: Crystal Dynamics and Eidos-Montréal spent years under the old ownership structure without shipping a new mainline Tomb Raider title, and a delay to either Metro 2039 or Tomb Raider: Legacy of Atlantis would hit a smaller, less diversified company far harder than it would have hit the old, larger conglomerate. The 2027 Nasdaq Stockholm listing date is also not fixed – the original April 2024 restructuring plan has already taken longer than initially outlined when it was first announced.
Analyst Outlook and Price Targets
Analysts have broadly welcomed the simplification, if cautiously. The current consensus rating sits at “Buy,” with a 12-month price target of SEK 78.90 – about 15% above the stock’s mid-July 2026 trading level, though still far below its 52-week high of SEK 112.36 and nowhere close to the levels the stock traded at before its 2023 crisis.
The real test for analysts will arrive once Fellowship Entertainment and the remaining catalog business start reporting as two separate segments in the first quarter of fiscal 2026/27. Segment-level reporting should make it easier to value the IP-heavy spinoff against pure-play peers like CD Projekt and Take-Two Interactive, rather than folding it into a group-wide number that also includes lower-margin mobile and distribution operations.
What It Means for Gamers and Developers
For players, the near-term impact is limited. Metro 2039, Tomb Raider: Legacy of Atlantis, Gothic 1 Remake, and Warhammer 40,000: Dawn of War IV are all still scheduled to ship under the current corporate structure before the Fellowship Entertainment listing takes effect in 2027. Franchise ownership does not change hands to a new external owner – Fellowship is simply the premium IP portfolio trading under a new, independently listed structure, with the same creative teams still attached.
For developers inside the affected studios, the picture is less settled. Every restructuring since 2023 has come with some combination of layoffs, studio closures, or canceled projects, and a spinoff built around leaner, more accountable management structures typically means further headcount reviews rather than expansion, even at studios producing the marquee titles Fellowship is counting on to prove the new structure works.
Predictions: Where Embracer Group and Fellowship Go From Here
- Segment reporting starting in Q1 FY2026/27 will show Fellowship’s IP business carrying meaningfully higher margins than the parent company’s catalog operations, strengthening the case for the split.
- Expect at least one further bolt-on acquisition from the leaner Embracer Group within 12 months, focused on mobile or retro-catalog assets rather than new AAA studios.
- Metro 2039 and Tomb Raider: Legacy of Atlantis will face outsized scrutiny as the two releases the market uses to judge whether Fellowship Entertainment can execute independently.
- The calendar-2027 Nasdaq Stockholm listing date carries real slippage risk, given that the original three-way breakup plan has already taken longer than initially outlined when it was announced in April 2024.
- If Fellowship’s shares price well after listing, expect renewed speculation about acquisition interest from larger publishers or investment groups, echoing Wingefors’ own description of the assets as undervalued.
Frequently Asked Questions
What is Embracer Group splitting into?
Embracer Group is separating into two independently listed public companies: a new entity called Fellowship Entertainment, which will list on Nasdaq Stockholm in 2027, and a leaner, continuing business that keeps the existing name and stock ticker, EMBRAC B.
What is Fellowship Entertainment?
Fellowship Entertainment is the new company being spun out of Embracer Group. It is built around IP-led game development, publishing, and licensing, and holds franchises including Tomb Raider, The Lord of the Rings, Metro, Darksiders, Dead Island, Kingdom Come Deliverance, and Remnant.
Which studios are moving to Fellowship Entertainment?
Eight studios move to the new company: 4A Games, Crystal Dynamics, Dambuster Studios, Eidos-Montréal, Fishlabs, Flying Wild Hog, Gunfire Games, and Warhorse Studios, alongside Dark Horse Media and the Middle-earth Enterprises licensing business.
When will Fellowship Entertainment start trading?
The target is a Nasdaq Stockholm listing during calendar year 2027, with segment-level financial reporting for both businesses beginning in the first quarter of fiscal 2026/27.
Why is Embracer Group splitting up?
Leadership cites sharper management focus and accountability, but the split follows a brutal fiscal 2025/26 in which adjusted EBIT fell 68% and net sales dropped 25%, and traces back to a restructuring first announced in April 2024 after a $2 billion financing deal with Savvy Games Group collapsed in 2023.
Who will run Fellowship Entertainment and Embracer Group?
Current CEO Phil Rogers and COO Lee Guinchard will lead Fellowship Entertainment after the split. Group CFO Müge Bouillon becomes Deputy CEO of the remaining Embracer Group while a search for its new CEO and CFO is underway.
Has Embracer Group spun off companies before?
Yes. Asmodee Group, its tabletop games business, became independent on February 7, 2025, and Coffee Stain Group spun off as a standalone company on December 11, 2025. Fellowship Entertainment is the third and final piece of the breakup plan announced in April 2024.
What games is Fellowship Entertainment releasing first?
Guidance for fiscal 2026/27 points to Gothic 1 Remake and Warhammer 40,000: Dawn of War IV in the first half of the year, followed by Metro 2039 and Tomb Raider: Legacy of Atlantis in the second half, all shipping under the current corporate structure before the Fellowship Entertainment listing takes effect.
