Electronic Arts To Be Acquired In $55 Billion Mega Buyout, Largest LBO Ever
The buying group includes Saudi Arabia’s Public Investment Fund (PIF), Jared Kushner’s Affinity Partners, and private equity firm Silver Lake.
- EA acquired by investor group for $55 billion.
- Deal involves Saudi PIF, Affinity Partners, Silver Lake.
- Largest leveraged buyout in history, surpasses TXU Energy.
Videogame giant Electronic Arts (EA.O), the publisher behind blockbuster games such as Battlefield and Madden NFL, has agreed to be acquired by a consortium of investors in a deal valued at $55 billion. If completed, the transaction will mark the largest leveraged buyout (LBO) in history, surpassing the $45 billion takeover of Texas utility TXU Energy in 2007.
The buying group includes Saudi Arabia’s Public Investment Fund (PIF), Jared Kushner’s Affinity Partners, and private equity firm Silver Lake. The purchase will be financed with $36 billion in cash, equity already held by PIF, and $20 billion in debt arranged by JPMorgan. EA shareholders are set to receive $210 per share in cash, a 25 per cent premium over the September 25 closing price of $168.32, giving the company an equity value of $52.5 billion. The shares of EA rose nearly 5 per cent in midday trading, touching about $202.54, reported Reuters.
What Does This Mean For Saudi Arabian Investors?
For Saudi Arabia’s $1 trillion wealth fund, the deal represents a major step toward positioning the kingdom as a global hub for gaming and sports. It aligns with PIF’s strategy to diversify away from oil by investing in tourism, infrastructure, sports, and entertainment.
Revival of Mega LBOs
Industry analysts suggest the EA transaction could signal the return of mega leveraged buyouts, which have been rare since the 2008 financial crisis due to higher borrowing costs. Kyle Walters, private equity analyst at PitchBook, noted that the deal “waves the green flag on sponsors resuming mega-deal transactions.”
What Does This Mean For EA?
EA is banking heavily on its sports portfolio and action shooter franchises to withstand a sluggish videogame market. The company is preparing to launch the much-anticipated Battlefield 6, while analysts estimate its pipeline could add over $2 billion in incremental bookings by FY28. Freedom Capital Markets said the investor backing will allow EA to pursue long-term growth opportunities that may have been too risky as a public company.
Analyst Concerns
Despite the premium, some analysts remain cautious. Benchmark analysts argued that the $210 per share offer undervalues EA, given its upcoming releases and strong earnings potential, “The true earnings power of EA is only beginning to emerge.”
Legacy of Previous LBOs
The EA deal eclipses the record held by TXU Energy’s $45 billion buyout in 2007, which ended in bankruptcy in 2014. Other large LBOs, including those of Toys “R” Us ($6.6 billion) and Hertz ($14.8 billion), also collapsed, raising questions about the sustainability of such mega-transactions.
Terms of Agreement and Timeline
The transaction is expected to close in the first quarter of FY2027, with $18 billion of debt financing arranged at completion. EA will remain headquartered in Redwood City, California, with CEO Andrew Wilson continuing in his role.
EA must pay a $1 billion termination fee if its board reverses course, accepts a higher bid, or pursues another deal within a year of rejection. Similarly, the consortium will owe $1 billion if regulatory delays extend completion beyond September 28, 2026, or if it fails to uphold the agreement.
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