Embracer Group AB, a Swedish gaming company, is set to sell its subsidiary, Saber Interactive, to a group of private investors in a deal valued at up to $500 million. This move comes as part of Embracer’s ongoing cost-cutting initiative, which has seen the company lay off employees and close studios worldwide over the past year.

According to a source familiar with the transaction, Saber Interactive, which currently has around 3,500 employees, will become a privately owned company. The company is planning to continue the development of a highly anticipated remake of Star Wars: The Knights of the Old Republic, a game that was previously being developed by Aspyr Media until 2022.

Embracer’s decision to sell Saber Interactive is regarded as one of its largest moves in its cost-cutting initiative. Both Saber and Embracer declined to comment on the deal. Saber Interactive, known for games such as Snowrunner and World War Z, operates studios in multiple countries, including the US, Portugal, and Russia. In addition to developing its own original titles, the company also provides services for other developers.

Embracer had acquired Saber for $525 million in 2020 as part of its aggressive acquisition strategy, which saw the company’s CEO, Lars Wingefors, acquiring at least 27 companies. Notably, several of the acquisitions, including Demiurge Studios and New World Interactive, were integrated into Saber Interactive.

However, Embracer has been facing financial challenges, including soaring interest rates and the cancellation of a $2 billion partnership with a gaming group backed by Saudi Arabia’s sovereign wealth fund. As a result, the company has been actively reducing its costs by shutting down subsidiaries, canceling projects, and seeking to sell off more divisions.

The $500 million deal also includes an option for Saber to bring along multiple Embracer subsidiaries, as per the source.