Recasts story and rewrites throughout to add background and details, adds analyst comment in paragraph 6

By Zaheer Kachwala and Rishabh Jaiswal

March 28 (Reuters) - U.S. videogame publisher Take-Two Interactive Software TTWO.O has agreed to buy Gearbox Entertainment from Sweden's Embracer EMBRACb.ST for $460 million in stock to beef up its arsenal of titles with games including first-person shooter "Borderlands".

The "Grand Theft Auto" franchise owner, which unveiled the deal on Wednesday, is picking up Gearbox for a steep discount when consolidation is driving up prices for makers of well-known titles.

Embracer's 2021 deal had valued Gearbox at up to $1.4 billion. But the "Tomb Raider" videogame publisher is trying to shore up its finances and Reuters reported last year the company had been considering options for Gearbox.

The Gearbox purchase will help Take-Two expand its game library and pipeline amid signs demand for its key titles, such as wrestling game "WWE 2K", could be slowing.

"It gives Take-Two another asset in its arsenal particularly as we enter period in the industry where intellectual property and well known franchises are at a premium," said Joost Van Dreunen, a lecturer at NYU's Stern School of Business.

Gearbox has six projects under development including sequels in the "Borderlands" and "Homeworld" franchises, the company said, adding the deal is expected to close sometime between April and June.

Investors are closely watching Take-Two for updates on the release of "Grand Theft Auto VI", with some reports suggesting it could be delayed into 2026 from 2025.

Take-Two's shares rose 1.4% in afternoon trading.

'EMBRACER'S TRANSFORMATION'

Embracer said the Gearbox sale would cut its net debt by about 3.2 billion crowns ($301.23 million) to 3.5 billion crowns and would immediately increase its free cash flow generation.

"(The deal) marks the result of the final structured divestment process and is an important step in transforming Embracer into the future," CEO Lars Wingefors said.

The company has been carrying out a restructuring programme since last year to cut debt. It warned last month it may fall short of its March net debt target of 8 billion crowns.

($1 = 10.6232 Swedish crowns)

(Reporting by Rishabh Jaiswal and Zaheer Kachwala in Bengaluru; Editing by Sriraj Kalluvila )

((rishabh.jaiswal@thomsonreuters.com;))