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Saudi-led group completes $55bn purchase of gaming giant EA

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Why This Matters

The $55 billion acquisition of Electronic Arts by a Saudi-led group marks the largest leveraged buyout in history, signaling significant shifts in the gaming industry's ownership landscape. This move could lead to major changes in EA's operations, monetization strategies, and workforce, impacting consumers and the broader industry. It highlights the growing influence of private equity and sovereign wealth funds in shaping the future of gaming companies.

Key Takeaways

The sale of gaming giant Electronic Arts (EA) for $55bn (£41bn) to a group of buyers including Saudi Arabia's Public Investment Fund (PIF) has been finalised.

The American company is known for making and publishing best-selling games such as EA FC, formerly known as Fifa, The Sims and Mass Effect.

The investors, who include Affinity Partners - led by President Donald Trump's son-in-law, Jared Kushner - are taking EA private, meaning all of its public shares will be purchased and it will no longer be traded on a stock exchange.

It is thought to be the largest leveraged buyout in history, meaning a significant part of it is paid for with borrowed money, which the company will have to pay back.

This is because as well as the $36bn it has already put into the deal, PIF needs to borrow $20bn from investment bankers JPMorgan to close it, with the business taking on the debt.

How paying back this debt will affect EA as a business has been the source of much speculation from journalists and analysts.

Bloomberg's Jason Schreier surmised it could lead to "mass layoffs, more aggressive monetization, and other big cost-cutting measures, external", for one of the industry's biggest companies.

Christopher Dring, editor-in-chief and co-founder of the Game Business, said the nature of the buyout, external was also likely to mean "a very hands-on approach from the investment group".

"Private equity firms are typically aggressive in their management of companies," he said.