The kingdom also constructed a sprawling city that’s home to four different gaming arenas as part of that effort.
PIF is also a minority investor in Nintendo.
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.
Mohammed bin Salman is trying to pivot Saudi Arabia’s economy away from its reliance on oil. Credit: Bloomberg
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.
CEO Andrew Wilson has led the company since 2013 and he will remain in that role, the firms said Monday. Electronic Arts would be taken private and its headquarters would remain in Redwood City, California.
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“Electronic Arts is an extraordinary company with a world-class management team and a bold vision for the future,” said Kushner, CEO of Affinity Partners. “I’ve admired their ability to create iconic, lasting experiences, and as someone who grew up playing their games - and now enjoys them with his kids – I couldn’t be more excited about what’s ahead.”
The size of the video game market has attracted large investors in recent years.
One of EA’s biggest rivals Activision Blizzard was snapped up by technology powerhouse Microsoft for nearly $US69 billion in 2023, while the competition from mobile video game makers such as Epic Games has intensified.
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 US oversight of TikTok’s social video platform, although all the details of that complex transaction haven’t been divulged yet.
Silver Lake also bought out two other well-known technology companies, the now-defunct video calling service Skype in a $US1.9 billion deal completed in 2009, and a $US24.9 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.
Electronic Arts is the maker of video games like Madden NFL, Battlefield, and The Sims,
By going private, EA will be able to retool operations without worrying about market reactions. Although its video games still have a fervent following, EA’s annual revenues have been stagnant during the past three fiscal years, hovering from $US7.4 billion to $US7.6 billion.
Mike Hickey of The Benchmark Company thinks the proposed deal’s $US210 per share offer price may be falling short of EA’s intrinsic value.
“With Battlefield 6 about to launch and a pipeline that could add more than $US2B in incremental bookings by FY28, the true earnings power of EA is only beginning to emerge,” he wrote.
Hickey is unsure if the transaction is in shareholders’ best interest.
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“In our view, this transaction is a self-serving, opportunistic move by management and the investor group,” he wrote. “Management has long been rumoured to seek a sale around $US200 per share, a level that may have been defensible in prior years but not in the current environment where visibility into growth, franchise momentum, and pipeline strength is far more robust. The board’s decision to recommend a sale at $US210 per share suggests a prioritisation of near-term certainty and legacy over maximising long-term shareholder value.”
But Nick McKay of Freedom Capital Markets believes the offer makes sense for EA because share price appreciation is likely limited given that the success of its sports franchises and various live services streams are already mostly baked into the stock.
“The financial backing and resources of the investor consortium should enable EA to increase its focus on long-term growth opportunities that may have been viewed as too risky or expensive as a public company,” he wrote in an analyst note.
EA shares, which rose nearly 5 per cent on Monday, had jumped 15 per cent on Friday after rumours of a takeover began to circulate.
The deal is expected to close in the first quarter of fiscal 2027. It still needs approval from EA shareholders.
AP, Bloomberg
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