Electronic Arts acquisition by non-public fairness sparks extra uncertainty for Canadian gaming business

Electronic Arts $55 billion greenback acquisition may mark the most important leveraged buyout in historical past and usher in a brand new section of public firms being purchased up by non-public fairness — resulting in extra uncertainty for Canada’s gaming business.

Under the phrases of a deal introduced Monday, a gaggle of three consumers pays the corporate’s stockholders $210 per share.

The purchasers embody non-public fairness agency Silver Lake Partners, Saudi Arabia’s sovereign wealth fund PIF and Affinity Partners. Affinity Partners is a non-public fairness agency run by U.S. President Donald Trump’s son-in-law, Jared Kushner.

Electronic Arts, the maker of video video games like Madden NFL, Battlefield, and The Sims, has Canadian roots, having bought Burnaby-based sport developer Distinctive Software in 1991 and renamed it to Electronic Arts Canada.

Now often known as EA Vancouver, that studio went on to develop a few of the firm’s largest franchises, and boasts round 2,400 staff within the Lower Mainland. The flagship Vancouver crew is thought for producing the EA Sports FC soccer video games and NHL hockey video games.

“We are entering a new era of opportunity,” EA CEO Andrew Wilson wrote to staff in a memo on Monday. 

“This is one of the largest and most significant investments ever made in the entertainment industry. Our new partners bring deep experience across sports, gaming, and entertainment. They are committed with conviction to EA – they believe in our people, our leadership, and the long-term vision we are now building together.”

But the deal, anticipated to shut within the first quarter of fiscal 2027, additionally sparks uncertainty for employees in an business that has already confronted a number of rounds of layoffs in a downturn because the pandemic.

Bradly Shankar, gaming editor at tech publication MobileSyrup, stated the gaming business has seen main acquisitions earlier than, however none evaluate to this.

“We’ve seen in the gaming space, publicly traded companies buying one another … but this is a private equity investor group taking over EA — so that was something that we haven’t seen and certainly [not] to this scale before,” he stated.

“There’s a lot of big EA titles that are being made in Canada. So that’s one of the big question marks surrounding this deal — how will those titles be affected?”

After being taken non-public, previously public firms typically endure intensive cost-cutting that may embody layoffs.

There has been no indication that would be the case with EA, although the corporate is taking over round $20 billion {dollars} in debt for the deal.

After reducing 5 per cent of its workforce in 2024, EA ended March with 14,500 staff after which laid off a number of hundred individuals in May.

EA didn’t reply to a CBC News request for remark.

Saudi Arabia’s growing funding

The acquisition by PIF, Saudi Arabia’s sovereign wealth fund led by crown prince Mohammed Bin Salman, marks an enlargement of Saudi funding into the gaming business worldwide, in line with Shankar.

“Even before this, they had a stake in EA, they have a stake in Nintendo, Capcom, Take-Two Interactive, which is the parent company of Rockstar, which makes Grand Theft Auto, so they obviously have their hand in a lot of pies already,” he stated.

“Because they’re private, there’s a lot of speculation. When you’re a publicly traded company, you have a lot more accountability in terms of the numbers that you’re putting out and there’s at least a bit more transparency there.”

According to Human Rights Watch, “the PIF has facilitated and benefited directly from serious human rights abuses linked to Crown Prince Mohammed.”

“PIF investments in the United States, the United Kingdom, and elsewhere in the world also serve [as] a powerful tool for Saudi Arabia’s soft power and influence,” it stated in a November 2024 report on the fund.

Although EA’s video video games nonetheless have a fervent following, its annual revenues have been stagnant in the course of the previous three fiscal years, hovering from $7.4 billion to $7.6 billion.