Electronic Arts to be acquired as gaming business consolidates

Electronic Arts, maker of video video games like “Madden NFL,” “Battlefield,” and “The Sims,” is being acquired for $55 billion, the most important leveraged buyout try in historical past.

Under the phrases of the deal introduced Monday, the personal fairness agency Silver Lake Partners, Saudi Arabia’s sovereign wealth fund PIF and Affinity Partners pays EA’s stockholders $210 per share. Affinity Partners is a non-public fairness agency run by President Donald Trump’s son-in-law, Jared Kushner.

Electronic Arts can be taken personal.

The whole worth of the deal eclipses the $32 billion value paid to take Texas utility TXU personal in 2007.

If the transaction closes as anticipated, it’ll finish EA’s 36-year historical past as a publicly traded firm that started with its shares ending their first day of buying and selling at a split-adjusted 52 cents.

The IPO got here seven years after EA was based by former Apple worker William “Trip” Hawkins, who started enjoying analog variations of baseball and soccer made by “Strat-O-Matic” as a teen in the course of the Sixties.

EA has been run by its present CEO, Andrew Wilson, since 2013.

This marks the second high-profile deal involving Silver Lake and a expertise firm with a legion of loyal followers in current weeks. Silver Lake can also be a part of a newly shaped three way partnership spearheaded by Oracle concerned in a deal to take over the U.S. oversight of TikTok’s social video platform, though all the main points of that complicated transaction haven’t been divulged but.

Silver Lake has additionally beforehand purchased out two different well-known expertise firms, the now-defunct video calling service Skype in a $1.9 billion deal accomplished in 2009, and a $24.9 billion buyout of non-public laptop maker Dell in 2013. After Dell restructured its operations as a non-public firm, it returned to the inventory market with publicly traded shares in 2018.

By going personal, EA will be capable of reprogram its operations with out being subjected to the funding pressures and scrutiny that typically compel publicly held firms to make short-sighted selections aimed toward assembly quarterly monetary targets. Although its video video games nonetheless have a fervent following, EA’s annual revenues have been stagnant in the course of the previous three fiscal years, hovering from $7.4 billion to $7.6 billion.

Meanwhile, one in all its greatest rivals Activision Blizzard was snapped up by expertise powerhouse Microsoft for almost $69 billion in 2023, whereas the competitors from cell online game makers corresponding to Epic Games has intensified.

After being taken personal, previously public firms typically bear intensive cost-cutting that features layoffs, though there was no indication that would be the case with EA. After jettisoning about 5% of its workforce in 2024, EA ended March with 14,500 workers after which laid off a number of hundred folks in May.

Liedtke writes for the Associated Press.