Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Video games maker Electronic Arts is being taken private by a Saudi-backed consortium assembled by Jared Kushner and Silver Lake in a $55bn deal that ranks as one of the biggest-ever leveraged buyouts.
The agreement values EA’s shares at $210 each, according to a statement on Monday, in what the consortium said was a 25 per cent premium to Thursday’s closing price in New York, before speculation of a deal pushed the shares higher.
The deal marks one of the largest take-private transactions in history, topping in dollar value the $45bn buyout of Texas utility group TXU in 2007.
“Electronic Arts is an extraordinary company with a world-class management team and a bold vision for the future,” said Kushner, who said he “grew up playing their games”.
EA, which is based in Redwood City, California, has among the richest content libraries of any video games maker, with blockbuster franchises including EA Sports FC, Madden NFL and The Sims.
Andrew Wilson, EA’s longtime chief executive, will be retained by the buyer group, leading the game developer as a private company after the takeover closes in early 2027. Financing for the takeover will come from $36bn of equity contributed by the buyer group, including PIF’s rollover of its existing 9.9 per cent equity stake in EA and a $20bn loan led by JPMorgan.
The deal is a huge bet that artificial intelligence can significantly cut EA’s operating costs, allowing the equity consortium to manage a large debt load on a company that historically carried limited net debt.
AI is already widely used across Silicon Valley to accelerate many kinds of computer programming. In games development, it can be used to replace voice actors and create backdrops and other assets, as well as automating play testing to avoid bugs before release.
But some believe the technology may soon be able to go much further in creating more realistic and responsive characters, or adapting storylines to players’ personal preferences.
The investors are betting that AI-based cost cuts will significantly boost EA’s profits in coming years, people involved in the transaction told the Financial Times.
Kushner, the son-in-law of US President Donald Trump, played an instrumental role in getting the deal over the line.
He set up investment firm Affinity Partners after leaving the White House following Trump’s first term, and Saudi Arabia’s Public Investment Fund is a large investor in Kushner’s fund.
People close to the discussions said Kushner’s involvement would ease the deal’s path through the Committee on Foreign Investment in the US, which adjudicates on deals involving foreign buyers.
The PIF has bold plans to deploy up to $70bn in capital a year, generated from Saudi Arabia’s oil wealth, in sectors such as technology and real estate.
It already ranked among EA’s largest public shareholders and has also owned stakes in video games companies Nintendo and Take-Two Interactive.
Credit: Source link
