EA closes $55 billion LBO with Saudi fund and Silver Lake

Electronic Arts (EA), the giant responsible for franchises like Battlefield and EA Sports FC, announced on Monday (29) a monumental agreement to become a private company. The transaction, valued at US$55 billion, will be conducted by a consortium led by the Public Investment Fund (PIF), the sovereign fund of Saudi Arabia, by the asset manager Silver Lake and by Affinity Partners.

The main point of concern for the sector is the future of transparency. The transition to private company status removes EA from the supervision and public reporting requirements of the SEC, which may limit visibility on corporate decisions and internal financial performance. Furthermore, the leadership of the PIF, the sovereign fund of Saudi Arabia, in the consortium of investors imposes a critical look at geopolitical influence in the entertainment mainstream. The move reinforces the investment strategy in intellectual properties with lasting appeal.

The US$55 billion transaction sets a new financial precedent in the corporate world. The agreement was structured as a leveraged buyout (LBO), and EA confirmed that it is the largest LBO in history, surpassing the largest deals ever recorded in the technology and entertainment sectors. This scale reflects investors' confidence in the value and long-term growth potential of gaming franchises, even after a period of industry slowdown.

EA shareholders will be significantly rewarded by the agreement. The consortium has agreed to pay US$210 per share in cash, representing a 25% premium over the closing price of the shares before acquisition rumors became public. The operation's financing will come from a combination of cash contributions from investors (Silver Lake and Affinity Partners), in addition to the conversion of the stake that PIF already held in the company, highlighting the crucial role of the sovereign fund of Saudi Arabia as the main driver of the business.

The timing of the announcement is notable, occurring as EA prepares for the launch of Battlefield 6, one of its most anticipated titles, and continues to capitalize on the strength of EA Sports FC and other intellectual properties. The investment thesis behind the US$55 billion acquisition is that large gaming franchises are high-value assets, where players tend to remain loyal to established brands, ensuring a predictable revenue stream.

The completion of the operation is expected to take place in the first quarter of fiscal year 2027. The long timeframe signals regulatory complexity and the need for global governmental approvals for a transaction involving record amounts and a sovereign fund from a foreign country.

The acquisition of Electronic Arts for US$55 billion is a historic business decision that validates the value of large gaming franchises with a 25% premium for shareholders. However, the leadership of the PIF and the shift to private company status introduce new corporate and geopolitical dynamics in managing titles like Battlefield and EA Sports FC, marking the largest LBO in history of the sector.