JPMorgan Chase, along with other Wall Street banks, has initiated the sale of a $5.75 billion cross-border leveraged loan to finance the acquisition of video game developer Electronic Arts. This transaction stands as one of the largest of its kind. Electronic Arts is set to be acquired by a consortium that includes the private equity firm Silver Lake, Saudi Arabia's Public Investment Fund (PIF), and Affinity Partners, the latter being managed by Jared Kushner, son-in-law of former U.S. President Donald Trump. The deal values the video game company at approximately $55 billion.
A $4 billion portion of the loan is being offered at a discount of approximately 98.50 cents on the dollar, meaning investors pay $0.985 for each $1 of face value. This discount is intended to boost the effective yield for investors, compensating for the significant credit pressure associated with the deal's total value of around $55 billion. In addition to the discount, the loan's interest rate is set at 3.50 to 3.75 percentage points above the benchmark rate.
The $4 billion tranche is part of a larger $5.75 billion dollar-denominated loan led by JPMorgan. The financing package also includes approximately $1.75 billion in euro-denominated debt—JPMorgan is marketing a €1.53 billion (roughly $1.75 billion) loan with similar pricing terms. According to a source familiar with the matter, lenders will hold a conference call at 10 a.m. Eastern Time on Tuesday to discuss the transaction. The commitment deadline for lenders is March 23.
Collectively, these debt instruments form the foundational funding for the acquisition of Electronic Arts by Silver Lake, PIF, and Affinity Partners. JPMorgan will share the burden of a $20 billion debt package with around 20 other lending institutions, including Bank of America, Citigroup, and Morgan Stanley. This represents one of the largest acquisition financing commitments ever assembled.
This buyout is among the largest leveraged buyouts in history, surpassing the approximately $45 billion acquisition of TXU in 2007. It underscores Wall Street's continued willingness to support major deals despite economic concerns and high valuations. Loan activity related to mergers and acquisitions is expected to be robust this year, with a recent highlight being the highly sought-after $7.25 billion financing for Hologic Inc., the largest leveraged loan since 2021. However, the financing for Electronic Arts will test investor appetite amid market volatility driven by the conflict in Iran and the disruptive impact of artificial intelligence, which have already negatively affected secondary loan prices.
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