Electronic Arts allows for a buyout high score

Unity Software

30/09/2025 13:00

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

By Jeffrey Goldfarb

NEW YORK, Sept 29 (Reuters Breakingviews) - Electronic Arts EA.O is advancing to the buyout level. The developer of popular sports, shooter and life-simulation video-games on Monday agreed to sell itself for $55 billion, striking the largest-ever private equity deal in an otherwise subdued M&A environment. It helps that key buyer Silver Lake Partners has proven capable of bringing experienced dexterity for this kind of mega-transaction.

EA, whose “FC” soccer and “Battlefield” franchises are best-sellers, has suffered three years of sliding revenue, but it’s on track to start growing again, according to estimates gathered by LSEG. At only 14 times forecast EBITDA for the next 12 months, however, EA was trading at a steep discount to rivals Take-Two Interactive Software TTWO.O and Nintendo 7974.T.

Its negligible net debt enables Silver Lake, Saudi Arabia’s Public Investment Fund and Jared Kushner’s Affinity Partners to turbo-charge leverage. A dearth of private equity activity leaves plenty of ammo. Through the first nine months of 2025, there were about 6,850 buyouts, down a fifth from a year earlier, LSEG data show. Some $2.5 trillion of capital pledged by investors to buyout funds was available in July, per S&P Global.

Large sums of it will be put to work at EA. The $55 billion purchase price includes a 25% premium. The $20 billion of debt committed by JPMorgan equals nearly 7 times the company’s expected $2.9 billion of EBITDA this fiscal year. How exactly the investment trio will cover the immense $36 billion equity check remains a mystery. Yet the amount of capital sloshing around these days makes this sort of multiplayer mode easier.

The buyout shop led by Egon Durban is sitting on some $15 billion of dry powder across its funds, according to PitchBook data, while Affinity manages $5 billion. For its part, PIF has $925 billion of total assets, including a 10% stake in EA that it plans to roll into the bid. The Saudi state fund’s Savvy Games earmarked $38 billion to invest in the sector, a local news agency reported in 2022.

What’s more, the spread layered atop base borrowing rates for leveraged loans has collapsed. At roughly 8%, annual interest costs would run to $1.6 billion. EA’s anticipated $2.6 billion in operating income for the year ending in March would easily cover it, before even accounting for any cost cutting.

Silver Lake probably has some Easter eggs, too, if its earlier complex buyouts of PC maker Dell and Hollywood talent agency Endeavor are any guide. The private equity firm holds a stake in $18 billion Unity Software U.N, which sells tools for developing video-games and whose CEO previously worked at EA. Orchestrating such vertical integration might juice extra value. Savvy is another potential merger candidate. Twitchy financial reflexes improve the chances of a high investment score.

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CONTEXT NEWS

Video-game developer Electronic Arts said on September 29 that it had agreed to be acquired for $55 billion by a group of investors that includes buyout firm Silver Lake, Saudi Arabia’s Public Investment Fund and Jared Kushner’s investment firm Affinity Partners.

Under terms of the agreement, EA shareholders will receive $210 a share in cash, a 25% premium to its unaffected price on September 25, the day before the Wall Street Journal reported the deal talks.

The transaction will be funded with about $36 billion of equity and $20 billion of debt financing. The Saudi fund will roll over its existing 9.9% EA stake.

Goldman Sachs is advising EA while JPMorgan is advising the buyout group and exclusively providing the committed debt.

Electronic Arts could use a stock turbo-charge https://www.reuters.com/graphics/BRV-BRV/jnvwbdwqnpw/chart.png

(Editing by Liam Proud; Production by Pranav Kiran)

((For previous columns by the author, Reuters customers can click on GOLDFARB/jeffrey.goldfarb@thomsonreuters.com))