Electronic Arts is being acquired by a consortium led by PIF, Silver Lake, and Affinity Partners for $55 billion, marking the largest private equity buyout in history.

Overview of the Deal

The acquisition of Electronic Arts Inc. (EA) is set to become the largest private equity buyout in history, with a total transaction value of $55 billion. The deal is being led by a consortium that includes the Public Investment Fund (PIF) of Saudi Arabia, Silver Lake, and Affinity Partners, with EA’s shares being purchased at $210 each, which reflects a 25% premium over the stock's unaffected price. The funding structure involves approximately $36 billion in equity from PIF and around $20 billion in debt financing, underwritten by J.P. Morgan. This transaction allows EA to pursue its long-term strategic initiatives without the pressures typically associated with being a publicly traded entity.

While the acquisition provides opportunities, it also poses significant challenges. The projected pro forma net debt-to-EBITDA ratio is approximately 9.95x, which raises concerns about the company's financial stability and ability to manage the new debt load. Additionally, the deal faces geopolitical and regulatory risks that may affect execution and operational flexibility.

Industry Overview in the United States

The video gaming industry in the United States has been experiencing robust growth, projected to reach a compound annual growth rate (CAGR) of approximately 5% up to 2028. The industry is dominated by ke