Shares of Electronic Arts jumped 15% Friday after a report that the company is finalizing a deal to go private at a $50 billion valuation.
The company is known for publishing major game titles tied to the NBA, NFL and pro soccer as well as first-person shooter games like Battlefield.
A consortium of investors including Silver Lake, Saudi Arabia’s Public Investment Fund, and Jared Kushner’s investment firm Affinity Partners would be stakeholders in the newly private entity. The deal would be the largest leveraged buyout in history, easily surpassing the $32 billion level (without debt) of a 2007 transaction involving Texas utility TXU.
The runup in the stock Friday, to a closing price of $193.35, put the company’s market value at around $48 billion.
One of the mainstays of video game publishing since its founding in the 1980s, EA remains a force but the landscape has dramatically changed. Mobile and social gaming has risen dramatically and the business model has shifted more toward free-to-play offerings brought to market by a wide range of smaller players. Major consoles like Sony’s PlayStation and Microsoft’s Xbox are not as market-defining as they had been for many years, with game players connecting with titles through other platforms.
The Entertainment Software Association estimated total spending on video games in 2024 hit $59.3 billion, flat with 2023.
A reliance on franchises has made EA’s stock volatile in recent months. Concerns about its football pipeline dragged shares down by double digits, but several weeks ago optimism about the upcoming release of Battlefield 6 boosted the stock again.
As the Journal noted in its report, leveraged buyouts are less perilous than they used to be due to the rise of sovereign wealth funds and the increasing resources of top-tier investors. Rather than the large swath of private equity firms that backed LBOs over the years, with investors sometimes squabbling over strategy and straining under heavy debt loads, the new-model buyouts have fewer and deeper-pocketed sponsors.
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