In October, gaming giant Electronic Arts (EA) announced its planned delisting from the stock market and going private in a massive $55 billion acquisition. The buyer consortium included the Public Investment Fund of Saudi Arabia (PIF), Jared Kushner’s Affinity Partners, and Silver Lake. Initially, the ownership percentages of these companies were not disclosed, but new information suggests that a single entity has committed significantly more cash than the others.
EA’s new owner revealed: Record stake from Saudi Arabia
According to a report based on Wall Street Journal data, the Public Investment Fund of Saudi Arabia (PIF) will own 93.4% of EA’s shares. This massive stake virtually eliminates the influence of other stakeholders. Among the other partners in the consortium, Silver Lake will hold a 5.5% stake, while Affinity Partners will hold only 1.1%. Furthermore, the PIF is known to be a significant investor in these two smaller companies. This means that if regulatory authorities and shareholders approve, EA will effectively be under Saudi Arabian control.
The financial details of the acquisition have emerged thanks to a filing with the Brazilian competition authority. Of the total cost of $55 billion, $36.4 billion will be covered by equity, while the remaining approximately $20 billion will be financed through debt. After deducting the $5.2 billion PIF already holds in EA, the fund is expected to pay approximately $29 billion in cash for the acquisition.
The Saudi fund’s move came as no surprise to industry watchers. The fund has previously pursued an aggressive growth strategy in the gaming industry, acquiring shares of giants such as Take-Two, Capcom, Nexon, and Nintendo. However, such a large majority stake calls into question EA CEO Andrew Wilson’s statements that “company values and commitment to gamers will remain unchanged.” With a 93.4% ownership stake, the de facto concentration of control in a single hand suggests that management changes may be inevitable.
Meanwhile, reports also indicate that PIF has recently experienced some cash flow difficulties. However, it’s been suggested that this isn’t due to gaming investments, but rather to the futuristic megacity project being built in the desert. However, this financial situation doesn’t seem to have prevented the fund from making its biggest move yet in the gaming world.
A critical update for PlayStation 5! If regulatory bodies and shareholders approve, one of the most established companies in the gaming world will be completely taken over. So, what are your thoughts on this massive acquisition? How do you think this radical shift in ownership will impact the quality or publishing policy of the EA games we love?
