As reported by the The Wall Street Journal, ailing games publisher EA is set to go private—that is, no longer be traded on the stock market—in a $50 billion deal with an investor group. This would be the largest such leveraged buyout ever recorded.
According to the WSJ’s anonymous sources, EA could be sold for as much as $50 billion, though the final price has not yet been agreed on, and EA has an estimated market value of $43 billion. The group of investors reportedly includes the private equity firm Silver Lake and the government of Saudi Arabia’s Public Investment Fund.
The deal could be announced as early as next week, and would be the largest leveraged buyout ever recorded. A leveraged buyout is when a private equity firm uses a significant amount of borrowed money to seal the deal, with the asset set to be acquired used as collateral in the debt.
This effectively leaves the acquired company liable for the debt—if its income can’t adequately service the debt, it will bear the consequences of a default, not the investors who made the purchase, and that usually means closures and layoffs. As reported by the Los Angeles Times, one such leveraged buyout eventually resulted in bankruptcy and closure for the once-ubiquitous toy retailer, Toys R Us.
The fact that the upper bound cited for the deal is proportionally close to EA’s estimated value (what’s $7 billion between friends?) could give reason for optimism that EA’s debt burden would be proportional to its means. Even aside from eventual bankruptcy, though, there’s precedent for acquisitions like this causing massive disruptions to the company: Microsoft cut 1,900 jobs at Xbox in January 2024 shortly after its acquisition of Activision-Blizzard, and Blizzard Entertainment was heavily affected in particular.
The other known quantity in the purported deal, the Saudi Arabian Public Investment Fund, has been making inroads in games for several years as part of a multifaceted push into global media and entertainment. This has included:
Critics of the Saudi Arabian government have called this practice “sportswashing,” or using a growing influence and ubiquity in the entertainment industries to distract from the government’s human rights record.
EA, much like its competitor Ubisoft, has struggled in recent years. Once formidable titans, both have been left behind as consolidation efforts have turned Microsoft and Sony into unassailable super heavyweights. At the same time, smaller publishers like DreadXP, Devolver, and Playstack have become ubiquitous at the other end of the budget spectrum.
EA lost the lucrative FIFA license, leading to its new, genericized EA FC series. Beloved RPG developer BioWare was sharply downsized after Dragon Age: The Veilguard proved a relative sales failure. The impending release of Battlefield 6, which has seen massive beta numbers and a positive critical reception, is looking like a much-needed win for the company.
Should the deal go through, here are some of the major studios and games that could be affected:
- BioWare: Mass Effect and Dragon Age.
- Respawn: Titanfall, Apex Legends, the Star Wars: Jedi series.
- DICE (and the other ‘Battlefield Studios’): Battlefield and Mirror’s Edge
- Maxis: The Sims 4 and Project Rene.
- The Madden NFL and EA Sports College Football series (and other EA Sports games).
- The dormant Dead Space and Need for Speed series.
- The once-dormant Skate, recently resurrected.
- The Command & Conquer series.
- The Origin Systems back catalogue, including Ultima and Wing Commander. Pepperidge Farm remembers.
