The court has chopped up THQ and sold it for parts. The dream of the publisher’s executives to file for bankruptcy and immediately sell the company as a whole is destroyed … its parts were worth too much.
The auction ordered by the Bankruptcy Court of the District of Delaware for bankrupt video game publisher THQ and its assets ended today. Many gamers and developers are worried about the future of the publisher’s development studios, intellectual properties, and employees.
We now know that Clearlake Capital will not take over THQ, and the company’s assets have been sold piecemeal to other publisher:
- Sega bought Company of Heroes developer Relic for $26.6 million. Zenimax (Bethesda) bid $26.3 million.
- Koch Media bought Saints Row developer Volition for $23 million. Ubisoft bid $5.4 million.
- Ubisoft bought new studio THQ Montreal for $2.5 million. No other bids.
- Darksiders developer Vigil did not find a buyer at this time.
- Crysis developer Crytek purchased Homefront for $500,000. No other bids.
- Koch Media purchased Metro property for $5.8 million. Ubisoft bid $5.175 million.
- Ubisoft bought South Park rights for $3.2 million. No other bids.
- Publisher Take 2 purchased new Evolve property for $11 million. Developer Turtle Rock Studios bid $250,000.
A press release sent out this afternoon said that Koch Media and Deep Silver “will roll out future plans for each franchise [Metro and Saints Row] in the coming months.”
“These franchises hold a special place in the hearts and minds of anyone who loves exceptional video games,” said Geoff Mulligan, the chief operating officer of Deep Silver, Inc. “We’re thrilled to usher in a new era for these franchises and are proud to welcome the visionaries and talented forces at Volition on board.”
Ubisoft also released comment this afternoon. “This deal adds experienced developers to our internal creative teams at a key moment in the cycle of the video game industry,” said Yannis Mallat, the president of Ubisoft Montreal.
Here is the letter THQ chief executive officer Brian Farrell and president Jason Rubin sent to employees, as reported by Kotaku:
To All THQ Employees:
We now have the answers we’ve been seeking through our financial restructuring and
Chapter 11 case. While much will be written, here are the facts of the bids and auction
that occurred t:
- Yesterday morning, we received a competing bid for the operating business,
along with Clearlake’s offer, and numerous offers for separate assets.
- During an auction process that lasted over 22 hours, the final conclusion was
that the separate-asset bids would net more than a single buyer for the majority
of the company.
- Shortly, we will, present the results to the U.S. Bankruptcy Court, which must
concur with our assessment.
- The proposed sales of multiple assets is as follows :
- Sega agreed to purchase Relic
- Koch Media agreed to purchase Volition and Metro
- Crytek agreed to purchase Homefront
- Take 2 agreed purchase Evolve and
- Ubisoft agreed to purchase Montreal and South Park
We expect these sales to close this week.
Some assets, including our publishing businesses and Vigil, along with some other
intellectual properties are not included in the sale agreements. They will remain part of
the Chapter 11 case. We will make every effort to find appropriate buyers, if possible.
What this means for employees
We expect that most employees of the entities included in the sale will be offered
employment by the new owners. However, we cannot say what these owners may
intend, and there will likely be some positions that will not be needed under the
new ownership. You should receive notice this week or early next week if the new
owners intend to extend employment to you. Please note that the terms of your new
employment, including pay and benefits, may be different from the current terms of
your employment with THQ.
If you are an employee of an entity that is not included in the sale, we regret that
your position will end. A small number of our headquarters staff will continue to be
employed by THQ beyond January 25 to assist with the transition. THQ has sufficient
resources to pay these employees for work going forward, and we will be contacting
these employees immediately to ensure their continued employment during this
transition period. We are requesting the ability to offer certain severance pay to
minimize disruption for employees of non-included entities as they determine the next
steps in their careers.
We know you will have many questions about this news. We’ll be meeting tomorrow
when we return to talk through this announcement and to answer any questions you
have. You will receive a benefits fact sheet and FAQs with answers to some questions
that may be on your mind. Please review these materials closely.
A personal note
The work that you all have done as part of the THQ family is imaginative, creative,
artistic and highly valued by our loyal gamers. We are proud of what we have
accomplished despite today’s outcome.
It has been our privilege to work alongside the entire THQ team. While the company
will cease to exist, we are heartened that the majority of our studios and games will
continue under new ownership. We were hoping that the entire company would remain
intact, but we expect to hear good news from each of the separate entities that will be
operating as part of new organizations.
For those THQ employees who are part of entities that are not included in the sale, we
are confident that the talent you have displayed as part of THQ will be recognized as you
take the next steps in your career.
Thank you all for your dedication and for sharing your talent with the THQ team. We
wish you the best of luck and hope you will keep in touch.
Chief Executive Officer
In December, THQ filed for bankruptcy. Clearlake Capital, an equity firm, immediately filed a motion to acquire THQ’s assets intact for $60 million. Earlier this month, GamesBeat reported that THQ’s lenders objected to Clearlake’s acquisition on the basis that a liquidation of assets would likely earn a higher price. The court agreed with that objection, which led to this auction.
Founded in 1989, THQ (which stands for Toy Head Quarters), after acquiring Broderbund’s video game division, produced dozens of games over the past two decades. While never a publisher the size of Electronic Arts, the company found success with games like the WWE wrestling franchise, the Company of Heroes real-time strategy games, and the open-world Saints Row games. It also produced a number of games on popular children’s licenses.
In August 2010, THQ debuted the UDraw GameTablet, a peripheral for Nintendo’s Wii console that allowed players to interact with art-based software. The $70 tablet was something of a surprise success on the Wii. Spurred by the positive reception, THQ decided to double down on UDraw by releasing a version for PlayStation 3 and Xbox 360.
This was a mistake.
In February, THQ discontinued the UDraw tablet. It reportedly had thousands of units sitting in warehouses that it could not get rid of. At this time, the company made a shift from kid-focused games, like its Nickelodeon-branded titles, to focus on premium experiences for the core gaming audience.
The publisher brought in Jason Rubin, founder of popular developer Naughty Dog, to operate as company president. This move was to help facilitate THQ’s renewed dedication to hardcore gaming.
It wasn’t enough, in November THQ defaulted on a $50 million Wells Fargo loan payment. It filed for Chapter 11 bankruptcy protection not long after.