The original WSJ article (https://www.wsj.com/business/deals/ea-private-deal-buyout-video-game-maker-808aefec) is behind a paywall, so here’s a summary of the news from Perplexity:
EA is reportedly close to finalizing a record-setting $50 billion deal to go private in what could become the largest leveraged buyout in history. The buyout would remove EA from public trading on the stock market. Investors involved in the deal reportedly include private equity firm Silver Lake and Saudi Arabia’s Public Investment Fund (PIF), which already holds about a 10% stake in EA. Affinity Partners, led by Jared Kushner, is also said to be part of the investor group.
The proposed $50 billion buyout price exceeds EA’s estimated market value of around $43 billion prior to reports. This deal would surpass the $31.8 billion leveraged buyout of TXU in 2007, setting a new record for such transactions.
Leveraged buyouts involve significant borrowed money with the acquired company liable for the debt, potentially leading to risks like closures or layoffs if debt servicing fails. Recent examples in gaming acquisitions have included major job cuts and organizational disruptions.
Saudi Arabia’s PIF has been actively investing in the gaming sector as part of a broader media and entertainment strategy, which has drawn criticism for “sportswashing” due to the country’s human rights controversies. PIF holds stakes in other gaming companies such as Nintendo and Niantic and has been involved in controversial deals like Ubisoft’s with Saudi entities.
EA has faced challenges in recent years including losing the FIFA license, downsizing BioWare after weak sales, and lagging behind industry giants Microsoft and Sony. The upcoming release of Battlefield 6 is seen as a critical event for the company. If the buyout is successful, key EA studios and games, including EA Sports FC and Battlefield, could be impacted by the transition to private ownership.
An official announcement on the deal could come soon, potentially as early as next week. EA has not yet publicly commented on the reports.
This potential buyout marks a significant shift in the gaming industry’s landscape due to its size, the involvement of prominent investors, and the implications for EA’s future business operations and strategy.
Sources: IGN, PC Gamer