Electronic Arts, maker of video games like Madden NFL, Battlefield and The Sims, is being acquired for $55 billion US, the biggest leveraged buyout attempt in history.
Under the terms of a deal announced on Monday, the private equity firm Silver Lake Partners, Saudi Arabia’s sovereign wealth fund PIF and Affinity Partners will pay the company’s stockholders $210 per share. Affinity Partners is a private equity firm run by President Donald Trump’s son-in-law, Jared Kushner.
Electronic Arts (EA) would be taken private. The total value of the deal eclipses the $32 billion paid to take Texas utility TXU private in 2007.
If the transaction closes as anticipated, it will end EA’s 36-year history as a publicly traded company that began with its shares ending its first day of trading at a split-adjusted 52 cents.
The IPO came seven years after EA was founded by former Apple employee William “Trip” Hawkins, who began playing analog versions of baseball and football made by Strat-O-Matic as a teenager during the 1960s.
EA has been run by its current CEO, Andrew Wilson, since 2013.
The company also has roots in Canada. It bought Burnaby, B.C.-based game developer Distinctive Software in 1991 and renamed it to Electronic Arts Canada.
Now known as EA Vancouver, that studio went on to develop some of the company’s largest franchises, including EA Sports FC and its NHL series.
As of today, EA has several other video game studios and offices across the country, including in Edmonton, Montreal, Toronto and Victoria, B.C., according to its website.
One buyer also involved in TikTok deal
This marks the second high-profile deal involving Silver Lake and a technology company with a legion of loyal fans in recent weeks.
Silver Lake is also part of a newly formed joint venture spearheaded by Oracle involved in a deal to take over the U.S. oversight of TikTok’s social video platform, although all the details of that complex transaction haven’t been divulged yet.
Silver Lake has also previously bought out two other well-known technology companies: the now-defunct video calling service Skype in a $1.9-billion deal completed in 2009, and a $24.9-billion buyout of personal computer maker Dell in 2013. After Dell restructured its operations as a private company, it returned to the stock market with publicly traded shares in 2018.
By going private, EA will be able to reprogram its operations without being subjected to the investment pressures and scrutiny that sometimes compel publicly held companies to make short-sighted decisions aimed at meeting quarterly financial targets.
Although its video games still have a fervent following, EA’s annual revenues have been stagnant during the past three fiscal years, hovering from $7.4 billion to $7.6 billion.
Meanwhile, major EA rival Activision Blizzard was snapped up by technology powerhouse Microsoft for nearly $69 billion in 2023, while the competition from mobile video game makers such as Epic Games has intensified.
After being taken private, formerly public companies often undergo extensive cost-cutting that includes layoffs, although there has been no indication that will be the case with EA. After jettisoning about five per cent of its workforce in 2024, EA ended March with 14,500 employees and then laid off several hundred people in May.
