EA Is Now Saudi-Owned — and $20bn of Debt Comes With the Deal

The deal is done

Electronic Arts is no longer a public company. The consortium led by Saudi Arabia’s Public Investment Fund closed its $55bn (£41bn) takeover on 4 August, taking the maker of EA Sports FC, Battlefield and The Sims private. Its shares have been delisted from the Nasdaq.

Shareholders walked away with $210 a share in cash. EA walked away with the debt.

It is thought to be the largest leveraged buyout in history, and the second-biggest acquisition in gaming after Microsoft’s $69bn purchase of Activision Blizzard. The EU waved the deal through in July; regulatory filings put the final split at 93.4% for PIF, 5.5% for Silver Lake and 1.1% for Affinity Partners, the firm founded by Jared Kushner.

The debt came with the deal

The buyout is financed with $36bn of equity — most of it PIF’s — and $20bn borrowed from JPMorgan. The loan sits on EA’s books, and it is the reason the next few years look tight.

Bloomberg’s Jason Schreier has said the pressure could produce:

“mass layoffs, more aggressive monetization, and other big cost-cutting measures”

Christopher Dring, editor-in-chief of The Game Business, expects “a very hands-on approach from the investment group”.

“Private equity firms are typically aggressive in their management of companies.”

EA’s finances were in reasonable shape going into the deal: $7.5bn of revenue last year, and Battlefield 6 selling over 7 million copies in its first three days. The company also cut staff after that record launch, and again ahead of the takeover closing.

Why Saudi Arabia wanted EA

George Osborn, author of Power Play: Video Games, Politics and the Battle for Global Influence, calls EA “an appealing financial opportunity” with “seemingly evergreen” live-service games. He also says its value to the fund was “not purely economic”:

“What is clear is that a state seeking to shape perceptions now owns an asset with proven reach to billions of people.”

PIF already owns Scopely outright, is the second-largest shareholder in Take-Two, and holds stakes in Nintendo, Capcom and Embracer. EA Sports FC has sold more than 325 million copies since 1993; the fund now owns the most-played football game in the world.

What a Saudi-owned EA means for Gulf players

For players in the Gulf, the change is invisible at first. EA FC 26 already carries the Saudi Pro League; Riyadh has hosted the Esports World Cup; PIF owns Newcastle United and four Saudi Pro League clubs. It now owns the game their fans play.

For UAE players, the calendar is unchanged: EA Sports FC 27 arrives on 25 September, and Andrew Wilson stays on as chief executive. The part to watch is Ultimate Team. The $20bn loan has to be repaid, and it will not be repaid with goodwill.

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What games does Electronic Arts make?

EA is best known for EA Sports FC, Battlefield and The Sims. Its wider catalogue includes Madden NFL, Apex Legends, Need for Speed, Dragon Age, Mass Effect, Dead Space and Plants vs. Zombies.

What is a leveraged buyout?

A takeover paid for largely with borrowed money, with the acquired company’s cash flow expected to repay the debt. In EA’s case, $20bn of the $55bn price was financed by JPMorgan, and the loan now sits on EA’s books.

What is Saudi Arabia’s Public Investment Fund?

The kingdom’s sovereign wealth fund, worth roughly $1 trillion and chaired by Crown Prince Mohammed bin Salman. It owns Newcastle United and Savvy Games Group, holds stakes in Nintendo, Capcom, Take-Two and Embracer, and is the vehicle for Saudi Arabia’s push to diversify beyond oil.