Saudi Arabia’s Crown Prince Mohammed bin Salman is making headlines again with a monumental deal involving the video game industry. The kingdom’s Public Investment Fund (PIF), alongside Silver Lake Partners and Jared Kushner’s Affinity Partners, is acquiring Electronic Arts (EA) for approximately $55 billion ($84 billion), marking this transaction as the largest private equity-funded buyout in history. Under the agreement, EA stockholders will receive $210 per share.
This acquisition is not only significant in terms of financial magnitude but also reflects a strategic pivot by Saudi Arabia to diversify its economy beyond oil. The deal comes as part of the PIF’s ongoing efforts to expand its influence in the gaming sector, having already invested billions into various gaming companies since 2022. According to Andrew Marok from Raymond James, the PIF has been actively acquiring minority stakes in major public gaming publishers and has completed outright purchases of companies such as ESL and Scopely.
A Strategic Move for the Gaming Industry
The acquisition of EA, known for popular franchises like Madden NFL, Battlefield, and The Sims, will see the company transition from being publicly traded to privately owned. This shift will allow EA to restructure and innovate without the immediate pressures of stock market fluctuations. EA’s journey began 36 years ago, founded by William “Trip” Hawkins, and its stock has seen varying degrees of success over the years.
PIF’s involvement as the largest insider stakeholder, with its existing 9.9 percent investment in EA, underscores its commitment to this deal. Crown Prince Mohammed, a noted enthusiast of video games, is leveraging this acquisition to facilitate job creation and economic diversification within the kingdom. The PIF has already committed around $30 billion to the gaming sector, including investments in Nintendo and the publisher of Pokemon Go.
Kushner expressed enthusiasm about the acquisition, stating, “Electronic Arts is an extraordinary company with a world-class management team and a bold vision for the future.” He emphasized his personal connection to EA’s games, having played them during his youth and now sharing that experience with his children.
Market Dynamics and Shareholder Perspectives
Despite the excitement surrounding the deal, analysts have mixed opinions on the offer price. Some believe the $210 per share valuation may not fully capture EA’s intrinsic value, particularly with upcoming game releases expected to significantly boost revenues. Mike Hickey from The Benchmark Company voiced concerns, suggesting that the management’s decision to prioritize a sale at this price could compromise long-term shareholder value.
Conversely, Nick McKay from Freedom Capital Markets argued that the deal is sensible for EA. He noted that the financial backing from the consortium could enable the company to pursue long-term growth strategies that may have been deemed too risky under public ownership.
Following the announcement, EA shares experienced a nearly 5 percent increase on Monday, building on a 15 percent surge the previous Friday sparked by takeover rumors. The transaction is anticipated to close in the first quarter of fiscal 2027, pending approval from EA shareholders.
This landmark acquisition not only reshapes the future of Electronic Arts but also solidifies Saudi Arabia’s role as a major player in the global gaming landscape, aligning with Mohammed bin Salman’s vision for a more diversified economy. The implications of this deal will be closely watched as it unfolds in the coming months, representing both a pivotal moment for EA and a significant investment in the future of entertainment technology.
