EA to Go Private in Record $55 Billion Deal
Video game powerhouse Electronic Arts (EA) has announced it will be taken private through a monumental $55 billion leveraged buyout. This deal involves a consortium made up of Silver Lake, Saudi Arabia’s Public Investment Fund, and Jared Kushner’s Affinity Partners.
This acquisition, which focuses on the company known for franchises like “Battlefield,” highlights the confidence high-profile investors have in the ongoing value of popular gaming properties, especially as the sector begins to recover from a slump.
If finalized, this would mark the largest leveraged buyout ever, surpassing the notable acquisitions of TXU Energy in 2007 and others like Toys “R” Us and Hertz. Additionally, it comes during a time of resurgent global deal-making, as lower borrowing costs are encouraging larger transactions.
As part of the agreement, EA shareholders will be compensated with $210 for each share, which is a 25% premium based on the share price before the announcement on September 25.
The total value of the deal, especially the equity aspect, stands at approximately $52.54 billion, based on calculations.
This move to go private is significant for EA, which is banking on its established sports games and popular action titles to navigate a tough gaming market where spending is becoming more selective among players.
Electronic Arts is also gearing up for the launch of “Battlefield 6,” in a landscape where gamers tend to favor familiar and well-loved titles.
However, analysts from Benchmark caution that, while the offer may seem attractive, it doesn’t adequately reflect EA’s true market value. They suggest that with new releases on the horizon, the potential earnings of EA could far exceed expectations.
EA’s sports franchises have seen immense success over the past decade, bringing in consistent revenue, largely due to strong in-game spending habits that bolster the series’ longevity.
The buyout comprises around $36 billion in equity investment and approximately $20 billion in debt financing, primarily arranged by JPMorgan, with $18 billion expected to be funded at the deal’s closure.
Completion of the transaction is anticipated in the first quarter of fiscal year 2027. Funding will be sourced from a mix of cash contributions from the involved partners and reinvestment of the Public Investment Fund’s existing stake in EA.
If EA decides to terminate the merger due to a reversal by its board, or if it accepts a better offer or pursues another transaction within a year after a shareholder rejection, the company would incur a $1 billion fee.
Similarly, the consortium would face the same penalty if regulatory hold-ups extend completion beyond September 28, 2026, or if they violate any terms of the agreement.
