Saudi Arabia’s Public Investment Fund is acquiring Electronic Arts

Saudi Arabia is furthering its gaming hub ambitions with a record $55B deal for electronic arts. The investments in the gaming industry are being touted as avenues to diversify the economy, create jobs and attract international tourism. 

Saudi Arabia has agreed to acquire Electronic Arts Inc. (EA) in a $55B leveraged buyout. The deal is a major milestone in the kingdom’s ambitions of becoming a gaming hub and works as a way to diversify the country’s economy away from oil.

Saudi Arabia has finalized a record $55B deal for Electronic Arts

Electronic Arts, known for its blockbuster franchises such as EA Sports FC, Madden NFL, Battlefield, and The Sims, will go private under the deal, which is backed by the kingdom’s Public Investment Fund (PIF), along with Silver Lake Management and Jared Kushner’s Affinity Partners.

The consortium agreed to pay $210 per share in cash, representing a 25% premium over EA’s share price before reports of the negotiations surfaced.

The deal represents the largest leveraged buyout in history, surpassing the 2007 acquisition of TXU Corp. for $48.4B. To finance the deal, JPMorgan Chase & Co. is providing $20B in debt, the largest such commitment ever for a buyout. The PIF, the sovereign wealth fund of Saudi Arabia, is rolling over its nearly 10% stake in EA which is valued at around $5B and will provide the majority of the $36B in equity funding.

EA’s Madden NFL and EA Sports FC franchises consistently rank among the top sellers in the gaming industry.This strong pipeline, including the highly anticipated Battlefield 6 launch on October 10, alongside the steady revenue from sports titles like Madden and EA Sports FC, was a strong enough rationale to target EA for private ownership.

Andrew Wilson, EA’s chief executive officer, praised the decision, calling it “a powerful recognition of our teams’ creativity and the iconic experiences they’ve built for millions of players worldwide.”

Saudi Arabia continues to spend big on gaming expansion

Crown Prince Mohammed bin Salman is a self-professed gaming enthusiast who intends to transform Saudi Arabia into a gaming hub. The prince himself appeared at the closing ceremonies when Saudi Arabia hosted the Esports World Cup in Riyadh earlier this year, awarding a record $70M in prize money.

The Public Investment Fund (PIF) has already committed $30B to the gaming sector, picking up stakes in Nintendo, Take-Two Interactive, and Nexon, along the way.

Savvy Games Group has also emerged as its primary vehicle for global gaming investments. Savvy bought Scopely for $4.9B in 2023 just as it launched the global hit Monopoly Go!. Then it acquired stakes in Niantic’s gaming division, including Pokémon Go, for $3.5B.

While these deals gave Saudi Arabia influence in mobile gaming, the EA acquisition provides a major foothold in the console and PC markets, which remain crucial parts of the $178B global gaming industry.

Both sides of the deal are under contrasting financial pressures. EA has endured layoffs and controversies around failed titles and acquisitions due to slowing global video game sales after a pandemic-era surge. On the other hand, the PIF is increasingly reliant on debt markets to fund its diversification drive as lower oil prices put pressure on Saudi Arabia’s finances.

Industry analysts have pointed out that the unity of EA’s sports portfolio and Saudi Arabia’s heavy investment in global soccer, including the Saudi Pro League, may create new opportunities for both gaming and sports broadcasting ventures.

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