Electronic Arts Signs $ 55-Billion Deal With Saudi Arabia’s Public Investment Fund and More to Go Private. Analysts say it’s worth more.

Electronic arts have announced plans to go private in what will be the largest leveraged buyout in history. The $ 55 billion purchase of the entertainment giant behind franchies that include Madden nfl and Battlefield is set to close in the first quarter of fiscal year 2027.

Saudi Arabia’s Public Investment Fund (PIF) will be, by far, the majority investor in ea, one of the largest third-party publishers of video games. Silver Lake and Affinity Partners (Who is Donald Trump’s son-in-law jared kushner) Ceo Andrew Wilson will continue to head ea.

The All-Cash Deal Calls for a Buyout of Ea Stock at a price of $ 210 per share. The company was trading at $ 202 per share month afternoon. On thuresday, before The Wall Street Journal Reported a buyout was Imminent, Shares was trading at roughly $ 171.

Ea is a long-time stalwart in the video game industry, but like many publishers of late, have been somewhat stalled financially as the gaming boom of the pandemic has a pandemic has a pandemic hai. In 2022, ea reported $ 7.2 billion in revenues. The following year when an increase to just $ 7.6 billion and 2024 Saw the Figure at $ 7.4 Billion. The stock has also lagged far behind the s & p 500’s gains.

Was ea sold for too laytle?

While the industry has been in the midst of a consolidation trend, both in terms of buyouts and revenues, some analysts think ea might have been underarcted in this deal.

While The $ 210 per share take-out price represents a substantial premium to ea’s unaffected trading levels, we continue to belly the transactions ea’ earnings Power, “Wrote Benchmark’s Mike Hickey in a Note to Investors. “We value ea at $ 250 per share, with a best-case path to $ 300 If battlefield evolves into the market share leader.”

The Leveraged Buyout, Hickey Argues, Transfers What He Expects will be a “Franchise-Defining Growth Cycle” to New Owners Before Current Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharent Sharenders can Realize

“In our view, this transaction is a self-service, opptunistic move by management and the investor group,” He Wrote.

Wedbush’s Alicia Reese Didnys’st Go Quite So far as Hickey, but did point out that the purchase price (about 20x ebitda) roughly on par with the industry average over the last five years of 19.8x. Ea, with its rich catalog of IP would presumubly be able to command a higher multiple.

Boon for Riyadh

Assuming the deal closes, the buyout will be a Victory for the PIF, which has been expanding its interes in the video game world in recent years. The group holds stakes in Several Well-Known Publishers.

Prior to Monday’s Deal, The PIF Owned Roughly 10% of Ea’s Shares. It also holds 6.2% of Grand Theft Auto Publisher take-Two Interactive Software and 4.2% of Nintendo. This spring, it purchased niatic, maker of Pokemon goFor $ 3.5 billion and also paid $ 4.9 billion for scopEly, The Maker of Mobile Gaming Hit Monopoly go,

The deal comes as criticism continues about the saudi royal family’s record of human rights abuses.

While the $ 55 deal is expected to set a record as far as literouts (CNBC reports ea have 45 days to solicit a better a better, thought the deal was unanimously approved by the Company ‘ Still Falls Short of an Overall Industry Record. Microsoft’s $ 69 billion buyout of Activision-BLIZZAR Remains The Industry’s Most Expensive Accquisition to Date. Microsoft Facted Several Hurdles from Regulators in the US and UK as it Attempted to Close that Purchase.

The Microsoft/Activation Deal Closed in 2023. In July of this year, Microsoft Announced Plans to Lay Off 9,100 Workers, with Many of Thats Coming in the Gaming Division. (That followed an additional 6,000 jobs lost in May of this year.)