12:20 PM EDT, 03/28/2024 (MT Newswires) -- Take-Two Interactive Software's ( TTWO ) proposed acquisition of Gearbox Entertainment from Swedish video game holding company Embracer Group is a "win-win" for both companies, Wedbush said in a note to clients Thursday.

The transaction is valued at $460 million, consisting of newly issued shares of Take-Two.

Embracer expects to gain a "sizable amount of cash" from the sale of Take-Two shares despite taking a loss on selling Gearbox. The Gearbox deal also reduces Embracer's net debt, improves its cash flow and limits its exposure to any potential financial outcomes for untested titles of Gearbox, Wedbush said.

For Take-Two, the transaction gives the company several high-profile franchises, helping it build out its pipeline of games, the investment firm said.

Wedbush also expects Take-Two to get a more profitable "Borderlands" franchise as it will no longer owe Embracer a royalty as the owner of the intellectual property, and a similar case is expected for the "Tiny Tina's Wonderlands" franchise, according to the note.

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