A shocking new development has arisen with news that Electronic Arts is reportedly prepping to be sold in a deal worth $50 billion. According to Reuters, EA is being sold to a private U.S. investor group and Saudi Arabia in what could be the world’s largest documented “leveraged” buyout yet. A leveraged buyout occurs when money is borrowed for the purchase of a company, typically by private equity firms, whereby the company then serves as collateral for the incurred debt.
“A group of investors including private equity firm Silver Lake, Saudi Arabia’s Public Investment Fund and Jared Kushner’s Affinity Partners could unveil a deal for the publisher as soon as next week, the sources said on Friday. If it goes through, the deal would mark the largest ever leveraged buyout in history.”
-Reuters
News of this deal arrives as EA prepares to launch Battlefield 6 on October 10. The latest entry in the popular franchise has, overall, had a positive reception during its Beta phase testing, which began last month and could be a big seller once launched. The timing of this purported buyout appears to be aligned with the upcoming release, as EA has faced its own share of financial challenges and layoffs in recent years. It is also being speculated that, similar to what happened following the Microsoft/Activision deal, there could be mass layoffs across the board for EA’s development studios in order to reduce the debt for investors.
Saudi Arabia’s Public Investment Fund (PIF) has been making numerous deals in the sports and entertainment fields over the last decade. At one point, it was in talks with Embracer Group, which heavily invested in a multitude of buyouts across the gaming industry, for a $3 billion partnership deal, but then backed out at the last minute. Not long after Embracer Group began closing studios en masse, or selling them off, presumably to pay off its debts.
Should this deal go through, it could be an even rockier road for studios such as BioWare, which is also likely still recovering from the lackluster sales of Dragon Age: The Veilguard, and reportedly working on a new Mass Effect game. DICE may be heavily affected regardless of the sales performance of Battlefield 6. Another developer, Respawn, has already had its own challenges with staffing changes at the top, and there’s been little word on progress with the next Star Wars Jedi game. EA is a large game publisher with many other iconic franchises under its roof, so there’s a lot to consider when it comes to what the final ramifications of being bought out will entail. Anonymous sources have stated that this deal could be announced by early next week.