Electronic Arts (EA), a prominent player in the gaming industry, has announced a deal to be sold for $55 billion (£41 billion). The acquiring consortium includes Saudi Arabia’s Public Investment Fund (PIF), Silver Lake, and Jared Kushner’s Affinity Partners. This represents one of the largest leveraged buyouts in history, wherein a significant portion of the purchase is funded through loans.
The acquisition will transition EA to a private entity, removing its public shares from stock exchanges. The agreed purchase price includes a 25% premium on EA’s market value, valuing the shares at $210 each. This transaction is noteworthy as it becomes the second most valuable gaming acquisition, following Microsoft’s $69 billion acquisition of Activision Blizzard, which faced scrutiny from regulators over competition concerns.
EA is well-known for popular game franchises such as EA FC (formerly FIFA), The Sims, and Mass Effect, accumulating substantial sales since its establishment over 40 years ago. The company has sold 325 million copies of its football titles alone. Concerns from industry observers have emerged regarding the implications of this debt-laden acquisition, particularly how it may affect EA’s financial stability and investment capabilities in developing new games.
The purchase also highlights Saudi Arabia’s expanding footprint in the gaming sector, which includes previous acquisitions such as Niantic’s gaming division, known for producing Pokémon Go. The country has increasingly invested in various gaming firms and hosted significant esports events, asserting its influence within the industry.
Additionally, the PIF, managed by Crown Prince Mohammed bin Salman, holds extensive assets due to Saudi Arabia’s oil revenues. However, the Crown Prince’s government has been associated with human rights controversies, including a UN report that implicated the state in the death of journalist Jamal Khashoggi, a claim that Saudi Arabia has consistently denied.
Source: https://www.bbc.com/news/articles/cn4w3jzx807o?at_medium=RSS&at_campaign=rss