Electronic Arts has announced that it’s sold itself in a $55 billion deal, and sold itself to an “investor consortium” made up of Saudi Arabia’s Public Investment Fund, Jared Kushner’s Affinity Partners, and the private equity firm Silver Lake.
EA said the all-cash deal “positions EA to accelerate innovation and growth to build the future of entertainment.” EA CEO Andrew Wilson is still on board as CEO. The investor consortium will take over 100% of EA. The PIF already had a 9.9% stake in EA prior to this deal. It’s a good day for EA stockholders, too, as they are getting $210 per share in cash as part of the deal–that’s a significant premium over what the stock was trading for last week. Silver Lake’s Egon Durban shared an enthusiastic quote, too. He said:
“The future for EA is bright, we are going to invest heavily to grow the business, and we are excited to support Andrew and the EA team as the company accelerates innovation, expands its reach worldwide, and continues to deliver incredible experiences to players and fans across generations.”
Part of the deal is being funded by $20 billion in debt financing. That’s a lot of debt, and people are already wondering and worrying about cost-cutting measures. It remains to be seen, however, if EA under its new ownership will undergo a cost-cutting plan. Oftentimes large mergers and acquisitions lead to cost-reduction programs that result in layoffs and other downsizing.
The PIF has attracted significant controversy over Saudi Arabia’s wide range of human rights violations. The PIF, through its Savvy Games Group, has invested in or acquired numerous gaming companies over the years. Before EA, Savvy bought Pokemon Go developer Niantic’s gaming division for $3.5 billion. The company also owns mobile and social gaming giant Scopely, paying $4.9 billion.