Electronic Arts, the creator of popular video games such as Madden NFL, Battlefield, and The Sims, is set to be purchased for a staggering $55 billion in what is poised to become the largest leveraged buyout in history.
As per the terms of the agreement unveiled on Monday, the private equity firm Silver Lake Partners, Saudi Arabia’s sovereign wealth fund PIF, and Affinity Partners have proposed a deal to acquire the company’s shares at $210 each. Notably, Affinity Partners, a private equity firm, is spearheaded by Jared Kushner, who is President Donald Trump’s son-in-law.
If the acquisition proceeds as planned, Electronic Arts (EA) will transition into a privately held entity, surpassing the $32 billion buyout of Texas utility TXU back in 2007 in terms of total value.
This move will mark the end of EA’s 36-year public trading history, which commenced with its shares closing at an adjusted 52 cents on the first day of trading post IPO.
Founded seven years after its inception by former Apple employee William “Trip” Hawkins, EA has been helmed by its current CEO, Andrew Wilson, since 2013. The company boasts multiple studios and offices spread across various Canadian cities, including Edmonton, Montreal, Toronto, Vancouver, and Victoria, B.C.
Noteworthy Involvement in TikTok Deal
This acquisition represents the second high-profile deal involving Silver Lake and a tech company with a substantial fan base in recent times.
Silver Lake is also a key player in a newly formed venture led by Oracle, which is part of the agreement to assume U.S. oversight of TikTok’s social video platform. However, the intricate details of this deal are yet to be fully disclosed.
Prior to this, Silver Lake has acquired two other prominent tech firms: the now-defunct Skype in a $1.9-billion deal finalized in 2009, and the $24.9-billion buyout of Dell in 2013, which saw the latter restructure and later return to the stock market with publicly traded shares in 2018.
Transitioning to private ownership will enable EA to revamp its strategies without the constraints of short-term financial demands often faced by publicly traded companies. Despite its loyal fan base, EA has seen stagnant annual revenues over the past three fiscal years, ranging from $7.4 billion to $7.6 billion.
Furthermore, competition in the gaming industry has intensified, with major rival Activision Blizzard being acquired by Microsoft for nearly $69 billion in 2023, and heightened competition from mobile game developers like Epic Games.
Following a transition to private ownership, companies often undergo significant cost-cutting measures, including layoffs. However, it remains unclear whether EA will follow this trend. The company had previously laid off approximately five percent of its workforce in 2024, bringing its total employee count to 14,500 by March, with additional layoffs occurring in May.