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Video game giant & battlefield creator Electronic Arts to go private in record $55 billion leveraged buyout

Riya R Alex
Electronic Arts will be privatised in a $55 billion buyout by a consortium including Silver Lake and Saudi Arabia's Public Investment Fund. 
Battlefield creator EA set for $55 billion buyout.

Electronic Arts (EA), a major video game company known for the Battlefield game, will be privatised through a record $55 billion leveraged buyout by a consortium including private equity firm Silver Lake, Saudi Arabia's Public Investment Fund, and Jared Kushner's Affinity Partners, the company said Monday.

The agreement for the creator of Battlefield highlights how investors are betting on the appeal of major game franchises as the gaming industry recovers from a long downturn.

This would be the biggest leveraged buyout ever, surpassing TXU Energy's 2007 acquisition and other major deals from that decade, such as Toys "R" Us and Hertz. It comes amid a resurgence in global dealmaking, driven by lower borrowing costs that boost interest in large transactions, Reuters reported.

 

Agreement details

Under the agreement, EA shareholders will be paid $210 per share in cash, which is a 25% premium based on the closing price on September 25 before news of the deal was reported.

EA will remain headquartered in Redwood City, California and continue to be led by Andrew Wilson as CEO.

Electronic Arts announced that the deal includes approximately $36 billion in equity investment, along with $20 billion in debt financing arranged by JPMorgan, of which $18 billion is expected to be funded at the closing of the transaction.

The transaction was approved by EA’s Board of Directors, is expected to close in Q1 FY27 and is subject to customary closing conditions, including receipt of required regulatory approvals and approval by EA shareholders. Following the close of the transaction, EA’s common stock will no longer be listed on any public market.

"While the $210 per share offer price may appear compelling … we believe it falls materially short of the company’s intrinsic value. With Battlefield 6 about to launch and a pipeline that could add more than $2B in incremental bookings by FY28, the true earnings power of EA is only beginning to emerge," Benchmark analysts told the news agency.

 

The buyout offer comes at a vital moment for EA, which relies heavily on its main sports franchise and action shooter rights to navigate a sluggish video game market as players become more selective with their spending.

Meanwhile, the company is preparing to launch the highly anticipated "Battlefield 6" in an industry where gamers tend to prefer well-known and trusted titles.

by Mint