Swedish gaming giant Embracer Group has announced that a “transformative” deal worth $2 billion with another industry player that the former had been working on for months has now collapsed. The announcement has resulted in Embracer’s shares plummeting by over 43% as of this writing, and the company lowering its earnings forecast for the next year by at least $300 million.

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After having acquired numerous studios and IPs over the last few years, including Middle-earth Enterprises and Tomb Raider (which it is rumored to now have sold to Amazon), Embracer Group has been forced to reevaluate its gaming strategy across the board in a move to cut costs. Nevertheless, the company has recently been discussing numerous “transformative” deals with other gaming industry players in the pipeline, which it had planned to reveal in its Q4 22/23 report yesterday.

One of these deals has now apparently fallen through, despite a verbal commitment from the other party in October 2022. Per Embracer Group CEO Lars Wingefors:

All documentation was finalized and ready to go as of yesterday. We asked for the execution of the agreement before our Q4 announcement. However late last night we received a negative outcome from the counterparty.

The deal made “perfect sense” to the would-be partner according to Wingefors, with “other decisions” ultimately deciding its fate. As a result of the deal’s collapse, Embracer Group stock has significantly plummeted, and the company has revised its earnings forecast for the next year from $965 million – $1.3 billion to $655- $840 million.

(Wingefors’ comments were provided by Axios.)