Electronic Arts will be acquired in a $55 billion all-cash deal by Saudi Arabia’s Public Investment Fund, Silver Lake, and Affinity Partners.

Electronic Arts (EA), a major video game publisher, has announced a $55 billion deal to go private in what is reported to be the largest leveraged buyout in Wall Street history. The transaction is led by Saudi Arabia's Public Investment Fund (PIF), which will hold a majority stake, with the remainder split between Affinity and Silver Lake. The PIF has been steadily increasing its presence in the gaming sector, holding significant stakes in companies such as Take-Two Interactive and Nintendo, and acquiring several major gaming properties. 

The deal comes amid a period of stagnation for EA, with relatively flat revenues and stock performance compared to the broader market. As part of the buyout, EA will take on approximately $20 billion in debt, potentially leading to increased pressure to boost profitability. The agreement includes a 45-day period during which EA can consider alternative offers.

Saudi fund snags EA in $55 billion deal

Video game maker Electronic Arts announcing a 55 billion dollar deal to go private and what is said to be the largest leverage buyout deal in Wall Street history Led by the sovereign wealth fund of Saudi Arabia Steve Kovach has more in today's tech check Steve Yeah This is a big one because I really wanted to look Sarah into the Saudi public investment fund and all the money It's been spending on gaming as it's been pushing over the years to build a video game juggernaut It's encompassing everything from the hottest mobile gaming properties to giant eSports Tournaments out there in Saudi Arabia now the WSJ report that came out on Friday Initially about this deal sent shares of take two interactive and roblox higher on this idea that there's going to be even more consolidation and M&A in the video game space and if that's the case the PIF actually already stands to benefit as it's been gathering stakes and Major gaming companies for some time now within that PIF gaming empire before today's announcement It already owned nearly 10% of electronic arts Which will of course be rolled into its ownership stake in this new deal It also owns about 6% of Grand Theft Auto maker take two and about 4% of Japanese Nintendo plus it acquired the Pokemon go game this spring for three and a half billion dollars and Bought the parent company of Monopoly go which is a huge mobile game for almost five billion dollars It's also sponsoring huge eSports competitions like the annual eSports World Cup in Riyadh That's been held the last two years and Crown Prince Mohammed bin Salam himself is a gamer and a key driver behind all those deals and David Faber by the way reporting this morning Sarah the PIF is of course going to own a majority of EA after this deal closes with affinity and Silver Lake Splitting the rest. It also comes in did a slump in the video game industry Just take a look at EA's annual revenues over the last five years Relatively stagnant over the last three coming out of the kovat lockdowns and the stock is up only 56% in that period lagging behind the S&P which is up about a hundred percent in the same time and Electronics arts is going to be taking on about 20 billion dollars in debt to finance It's part of the deal which could put pressure on the company to keep costs down or add more Monetization options to their games to juice growth now. This deal is not done yet Sarah EA has 45 days according to David Faber to solicit other offers before taking this one guys, of course the street Steve is anxious to put name other names that might benefit from a Continuation of this trend take two gets mentioned obviously roblox today even up love it. I'm seeing on some desk notes this morning Yeah, and I would definitely look at take two for a big one roblox is that kind of a secular story here? They're actually growing like crazy this year there I forget what their stock is up now But they've been having a killer run just in terms of users and revenue growth You don't see that so much as at take two and the more traditional gaming Publishers and of course there was Activision I bet Microsoft kind of regrets now buying Activision for as much as they did because as they were going through that process in 2022 2023 Just so much of the value of that company was already left because of the slump in gaming I told you about so there are a lot of there aren't too many public companies left to be in the crosshairs I was joking earlier Carl that I'm running out of public gaming companies to cover because they either get acquired or go private Yeah Roblox here today that is a heck of a chart versus the SMP Steve. Thanks talking a bit Steve Kovac

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