A consortium spearheaded by the Saudi Public Investment Fund has finalized its $55 billion acquisition of the video game publisher Electronic Arts. The deal's financing partners include the private equity firm Silver Lake and Affinity Partners, the investment vehicle managed by Jared Kushner, the son-in-law of former U.S. President Donald Trump.
Electronic Arts confirmed the transaction on Tuesday evening, stating that its shares have ceased trading and will be delisted from the Nasdaq stock exchange. Shareholders will receive $210 in cash per share in the deal. The move marks a significant expansion of Saudi Arabia's influence in the sports and gaming sectors. Turki Al-Nowaiser, the head of international investments for the Saudi Public Investment Fund, said in a statement: "Entertainment and sports are strategic priority tracks for the fund."
Analysts have previously noted that the transaction will saddle Electronic Arts with substantial debt, raising questions about the future direction of its game intellectual property. According to reports, the Saudi Public Investment Fund borrowed $20 billion from its transaction advisor, JPMorgan Chase, to complete the closing, making it the largest leveraged buyout in history. Last year, several analysts told reporters that the heavy debt burden would force Electronic Arts to focus on its lowest-risk, established franchises, such as The Sims, Battlefield, and various sports titles, rather than attempting to develop new original intellectual property.
Michael Foote, founder of F-Squared, commented: "The massive debt hanging over the company is unlikely to completely reverse its strategy." He added, "However, management will become more entrenched in sticking with game projects they believe have the highest revenue potential, even if those projects themselves carry significant risk." He continued: "It will be difficult for Electronic Arts to repay this debt without resorting to significant layoffs, studio closures, or potentially selling off some of its game IP."
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