The sale of gaming giant Electronic Arts (EA) for $55bn (£41bn) to a group of buyers including Saudi Arabia’s Public Investment Fund (PIF) has been finalised.
The American company is known for making and publishing best-selling games such as EA FC, formerly known as Fifa, The Sims and Mass Effect.
The investors, who include Affinity Partners – led by President Donald Trump’s son-in-law, Jared Kushner – are taking EA private, meaning all of its public shares will be purchased and it will no longer be traded on a stock exchange.
It is thought to be the largest leveraged buyout in history, meaning a significant part of it is paid for with borrowed money, which the company will have to pay back.
This is because as well as the $36bn it has already put into the deal, PIF needs to borrow $20bn from investment bankers JPMorgan to close it, with the business taking on the debt.
How paying back this debt will affect EA as a business has been the source of much speculation from journalists and analysts.
Bloomberg’s Jason Schreier surmised it could lead to “mass layoffs, more aggressive monetization, and other big cost-cutting measures, external“, for one of the industry’s biggest companies.
Christopher Dring, editor-in-chief and co-founder of the Game Business, said the nature of the buyout, external was also likely to mean “a very hands-on approach from the investment group”.
“Private equity firms are typically aggressive in their management of companies,” he said.
Shams Jorjani, the chief executive of Arrowhead Game Studios – an independent studio which worked with publishers Sony to make the record-breaking Helldivers 2 – told the BBC that EA has traditionally been seen as having a wide portfolio of games, from blockbusters to smaller indie titles.
“This deal is consolidation, no question – and I wonder whether new ownership optimises for the safe bet – more sequels, more mega-franchises – over that breadth,” he said.
“I’m hopeful this leads to more of that range, not less, but if it turns EA into a sequel-and-mega-franchise machine, that’s a real waste of one of the best catalogues in the industry.”
