Electronic Arts, the well-known video game publisher, announced on Monday its agreement to be taken private in an extraordinary $55 billion deal. The consortium of investors leading this acquisition notably includes a firm managed by President Trump’s son-in-law, Jared Kushner, along with Saudi Arabia’s sovereign wealth fund.
Shareholders are set to receive $210 per share in cash, representing a substantial 25 percent premium over the company’s stock price prior to the news of the deal becoming public.
Should it be finalized, this acquisition would represent the largest buyout of a publicly traded company ever recorded, even without adjusting for inflation. The investors plan to partially fund this colossal deal with a $20 billion loan secured from JPMorgan Chase.
The primary forces behind this groundbreaking transaction are Saudi Arabia’s Public Investment Fund, which already holds approximately 10 percent of Electronic Arts, the private equity firm Silver Lake, and Mr. Kushner’s Affinity Partners.
This strategic move underscores the Saudi fund’s ongoing efforts to expand its presence in the gaming sector as it actively seeks to diversify its investments beyond its traditional oil holdings. In 2021, the fund established the Savvy Games Group, tasked with spearheading a planned $38 billion investment into the gaming industry. Just this past summer, Riyadh hosted the Esports World Cup, a major video game tournament boasting an impressive $70 million in prize money.
The fund’s aggressive entry into gaming is part of a broader investment strategy by the kingdom in sports. This includes significant backing for endeavors like LIV Golf, a direct competitor to the PGA Tour, a stake in the Professional Fighters League, and substantial investments in both domestic and international soccer. Electronic Arts itself is a dominant force in sports gaming, with hugely popular franchises such as FIFA for soccer and Madden for football.
Turqi Alnowaiser, the deputy governor and head of international investments at the Public Investment Fund, highlighted in a statement that the Saudi fund is “uniquely positioned in the global gaming and e-sports sectors, building and supporting ecosystems that connect fans, developers and I.P. creators.”
Andrew Wilson, the chief executive of Electronic Arts, expressed his enthusiasm, stating, “I am more energized than ever about the future we are building.”
The buyout will require approval from the Committee on Foreign Investment in the United States (CFIUS), a panel of government agencies responsible for reviewing international deals for potential national security implications. Some lawmakers have previously called for rigorous scrutiny of the Saudi fund’s sports investments due to national security concerns.
Aaron Bartnick, a former official in the Biden administration who handled national security reviews of foreign investments and is now a fellow at Columbia University, commented, “People don’t often think about video games and national security together, but these are platforms that reach millions of Americans and often collect a lot of personal data.” He suggested that the committee would “want to take a close look even if they ultimately end up signing off.”
The Trump administration maintained warm relations with the Saudi government, and the Saudi sovereign fund holds one of the largest stakes in Mr. Kushner’s investment firm. Mr. Kushner himself collaborated closely with the kingdom during his tenure in government during Mr. Trump’s first term.
Electronic Arts will be obligated to pay a $1 billion termination fee to its new investors if the company’s board ultimately decides against proceeding with the buyout, or if shareholders fail to approve the deal. Conversely, the investors would pay a $1 billion fee to Electronic Arts if, among other reasons, they are unable to secure the necessary regulatory approval to finalize the transaction.
A termination fee would also be due from Electronic Arts if it were to reject the current buyout agreement in favor of a superior offer. However, whether other potential suitors might emerge remains uncertain. Analysts had previously speculated that a major media entity, such as Disney, could attempt to acquire the gaming company. Such a deal would also likely face significant regulatory scrutiny.
The video game industry experienced a notable surge in sales and popularity during the Covid-19 pandemic lockdowns. Nevertheless, games produced by Electronic Arts are known for being expensive to develop. Furthermore, there’s a discernible shift among gamers away from traditional console and PC titles towards games playable on mobile devices.
The monumental deal is projected to conclude in the first quarter of 2027. Following the acquisition, Electronic Arts is expected to maintain its headquarters in Redwood City, California, and continue under the leadership of Mr. Wilson.
The previous record for a public company buyout was the $32 billion acquisition (excluding debt) of Texas utility company TXU by a group of private equity firms in 2007, just before the financial crisis.