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

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 developing and publishing best-selling games such as EA FC, formerly known as Fifa, The Sims, and Mass Effect.

The investors, which 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. This 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.

Christopher Dring, editor-in-chief and co-founder of the Game Business, said the nature of the buyout was also likely to mean a very hands-on approach from the investment group, stating that private equity firms are typically aggressive in their management of companies.

Stock photo for illustration only, not from the actual event

The deal caused concern amongst some fans of EA's massive library of games, particularly as games like The Sims champion inclusivity and LGBT+ relationships. In Saudi Arabia, consensual same-sex sexual conduct can be punishable by death or flogging under interpretations of Sharia law.

In protest at the deal to sell EA to the PIF, the advocacy group Players Alliance HQ has asked gamers to petition their local politicians and speak out against it. They noted that with the PIF being the majority owner in the potential buyout, there is a large concern that creative decisions could be influenced by these outside factors, leading to themes such as free speech, gender, LGBTQI+ and other aspects of Western politics being reduced or fully censored across major franchises.

PIF is a £514bn pot of money used by the government of Saudi Arabia to invest in many different kinds of ventures, such as football club Newcastle United. The deal ranks as the second-biggest acquisition in gaming history, after Microsoft's $69bn purchase of Activision Blizzard.

George Osborn, journalist and author of Power Play: Video Games, Politics and the Battle for Global Influence, said it was still an appealing financial opportunity to PIF despite the enormous price tag, pointing to the longevity of the 35-year-old business and its seemingly evergreen live-service games.

Source: BBC Business