Battlefield and Madden NFL developers agree to sell themselves in a deal that will be the biggest leveraged buyout in history.
The Saudi Arabian Sovereign Wealth Fund, an investment company run by the US president’s son-in-law, and a California-based private equity firm have purchased the gaming giant electronic arts (EA) with the largest leveraged buyout worth $55 billion.
Public Investment Fund (PIF), a $1 trillion Saudi venture that is increasingly buying stakes in the global entertainment industry, has formed a consortium with Jared Kushner’s affinity partner, technology and media-focused investment company Silver Lake.
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They reached a transaction to pay EA shareholders $210 in cash per share, a premium of 25% over the company’s share price. Rumors about the trade spread last week, with the highest ever stock price even at a premium of over $179 in mid-August.
EA stock rose 15% in the first rumors, up at least 5% since trading was confirmed on Monday, trading at over $200 per share on Tuesday. The agreement will keep the company private and is expected to close by the first quarter of 2027.
By the end of the agreement, EA’s 36-year 36-year execution as a public company will be over. There is no need to issue a public quarterly report and its shares will be delisted by the Nasdaq.
The deal is to be funded by approximately $36 billion in shares from three sponsors, including a 9% stake in the company already held and rolled in by the Saudi Arabian Wealth Fund.
JPMorgan Chase will provide $200 billion by JPMorgan Chase in debt financing undertaken by the banking giant.
In a statement, EA said the board has approved the transaction. This transaction, like regulators, must be approved by stakeholders.
Stakeholders are not believed to face antitrust issues, unlike Microsoft’s acquisition of Actionision Blizzard, as Microsoft is a financial transfer of ownership rather than a direct competitor merger.
“I admired their ability to create iconic and lasting experiences, and as someone who grew up playing the game – and now I’m having fun with his kids – I couldn’t be excited about what’s going forward.”
EA manufactures huge game franchises such as Battlefield, Sports FC Football Games, and Madden NFL, and owns studios such as Bioware and Maxis, creating giant award-winning series that includes Mass Effect and The Sims.
For now, the company is on the same structure and schedule, with CEO Andrew Wilson at the helm.
The initial response from the gaming community was largely negative, indicating that many journalists, streamers, developers and users were shocked and disappointed online about the huge impact of their business decisions on the rise in the gaming industry.
