Gamemaker EA might be sold for $50B next week
What's the story
Electronic Arts (EA), the video game publisher behind popular franchises like FIFA and Battlefield, is said to be in advanced talks for a private acquisition. The deal, which could be announced as early as next week, is valued at around $50 billion. A consortium of investors including private equity firm Silver Lake, Saudi Arabia's Public Investment Fund (PIF), and Jared Kushner's Affinity Partners are involved in the discussions.
Historic deal
Potential record-breaking leveraged buyout
If finalized, this transaction would be the biggest leveraged buyout in history. A leveraged buyout is a financial transaction where the acquirer uses borrowed money to purchase a company. Following reports of EA's potential sale, its shares surged over 15% on Friday afternoon. The gaming industry has been dealing with rising development costs and fierce competition while trying to meet high fan expectations amid declining discretionary consumer spending.
Market outlook
EA's market valuation and upcoming game boost
EA, which has a market valuation of over $42 billion, had projected quarterly net bookings below the Wall Street expectations in July. However, the company is banking on Battlefield 6, the latest installment in its popular shooter game series, to boost sales and compete with Activision Blizzard's Call of Duty franchise. The game is slated for release in EA's current fiscal year, and is expected to sell millions of copies.
Investor profiles
Details on the investor consortium
The investor consortium includes Silver Lake, a leading tech-focused private equity firm known for major technology buyouts. It recently acquired a majority stake in Intel's Altera for $4.46 billion. PIF, part of Saudi Arabia's "Vision 2030" strategy, has also diversified beyond oil with significant investments in gaming and other sports sectors. Affinity Partners was founded by US President Donald Trump's son-in-law Kushner, and has investments from funds in Saudi Arabia, Qatar, and the UAE.