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Joe and Anthony Russo’s AGBO Scores $1.1 Billion Valuation, Sells Minority Stake to Nexon

Joe and Anthony Russo Brothers
Dave Allocca/Starpix/REX/Shutter

AGBO, the entertainment company founded and controlled by “Avengers: Endgame” filmmakers Anthony Russo and Joe Russo, has sold a minority stake for $400 million to Tokyo-based game maker Nexon. The deal values AGBO at $1.1 billion.

AGBO was established by the Russo brothers and their producing partner Mike Larocca in 2017 and has created such films as the gritty war drama “Cherry,” the action thriller “Mosul,” the black comedy “Assassination Nation,” and “Extraction,” an action film with Chris Hemsworth that premiered on Netflix and inspired an upcoming sequel. In television, the company has been less prolific, producing the Netflix docuseries “Larry Charles’ Dangerous World of Comedy,” but they have other high-profile shows on tap, such as the spy series “Citadel” and the comic book-inspired “Grimjack.”

The Russo brothers are best known for their work in the Marvel Cinematic Universe, where their credits include “Captain America: The Winter Soldier,” “Captain America: Civil War” and “Avengers: Infinity War.” They also directed episodes of “Arrested Development,” “Community” and “Happy Endings.” The brothers are currently making the Chris Evans and Ryan Gosling action-thriller “The Gray Man” for Netflix.

Talks between the companies started in August with a lunch at the Hotel Bel-Air between AGBO CEO Jason Bergsman and Nexon’s Chief Strategy Officer Nick van Dyk. The sale closed on Dec. 21.

The new partners said that Nexon’s investment will help AGBO’s development and production of intellectual properties that can resonate with global audiences. The companies hope that the movies and shows that AGBO produces can spawn gaming and virtual world experiences, which is Nexon’s area of expertise. Nexon’s games could, in turn, be the basis of films or shows of their own, like how other video games such as “Sonic the Hedgehog” or “Mortal Kombat” have inspired big-screen franchises. That kind of alliance makes strategic sense. AGBO and the Russos have long been proponents of transmedia storytelling, an approach that allows a narrative to move beyond formats. The brothers’ next film, an adaptation of the graphic novel “The Electric State,” won’t just be a feature, it will also have a television component.

“This deal allows us to accelerate our universe building capabilities and the very ambitious growth plan that we have,” Bergsman said in an interview with Variety. “What’s compelling about Nexon in particular is the prospect of complimenting our strong capabilities and emphasis on linear storytelling with Nexon’s strong capabilities and emphasis on interactive storytelling. We are motivated to find ways to work together to expand our creative boundaries.”

The pair said they have already identified properties in each other’s libraries that could be exploited in other forms of media.

“We’ve approached this not just as an investment, but as a profound cross-media partnership with the very best creators and adapters of franchise film and TV in the world,” says van Dyk. “We don’t want to just facilitate their growth with capital, we also want to bring strategic benefits to bear.”

Despite the high hopes that AGBO and Nexon’s media properties can cross-pollinate, gaming and Hollywood have a tangled history. For every box office hit like “Sonic,” there are myriad examples of game-to-film duds such as “Super Mario Bros.” or “Warcraft.”

The pact comes at a boom time for content creators. Reese Witherspoon’s Hello Sunshine sold itself to Candle, a media venture run by former Disney executives Kevin Mayer and Tom Staggs, for $900 million, and earlier this week Candle bought a minority stake in Will Smith and Jada Smith’s Westbrook Inc. that valued the company at $600 million. Last year, LeBron James’ Springhill sold a minority stake to RedBird Capital Partners, Fenway Sports Group, Nike and Epic Games in a deal that valued the basketball star’s entertainment venture at $725 million. Other production companies and studios such as Legendary, A24 and Imagine have drawn interest from prospective buyers without making deals. However, AGBO says it was not trying to capitalize on the trend.

“We were intending to do this outside of the larger trends that were going on,” says Larocca. “We didn’t go to market because we thought it was the right time to maximize value. We went to market because it was the right time for us in terms of where we were in our growth.”

Nexon is a Tokyo-listed creator of online games and virtual worlds such as the “Dungeon Fighter” franchise and “MapleStory.” It has an $18 billion market capitalization. The company’s investment in AGBO is made through Nexon Studios, its newly launched U.S.-based film and television division, which is led by van Dyk. Nexon has committed to invest as much as $100 million in the first half of 2022 in AGBO.

“This helps us ramp up our productions and enables us to have more ownership in the things we make,” says Larocca, who called into the interview from the Prague set of “Extraction 2.” “Every aspect of our pipeline can be supercharged by this.”

In a statement, the Russos, said the deal “represents a significant juncture for entertainment, furthering the convergence of franchise filmmaking and games with a global reach.”

The minority investment may not be a controlling stake, but it does make Nexon the largest individual shareholder in the company. It now owns 38% of the company, which is less than the aggregate stake of AGBO’s management team. In addition, van Dyk has been added to AGBO’s five-person board of directors along with Nexon Film and Television SVP Tim Connors. The other members include the Russo brothers and Bergsman.

Despite making an equity investment, van Dyk says that Nexon did not attempt to buy a majority position.

“I remember telling Jason, ‘You really shouldn’t sell control’,” he says. ” ‘You have a tremendous glide path ahead of you and so the best thing we can do is provide as much capital as you need to grow and then get out of your way.’ Their creative independence is essential’.”

PJT Partners served as financial advisor to AGBO, and Skadden, Arps, Slate, Meagher & Flom LLP served as legal counsel to AGBO. Loeb & Loeb served as legal counsel to Nexon.

The Wall Street Journal broke the news of Nexon’s investment in AGBO.