What's the Big Deal? On EA's take-private

Reading time: ten minutes

Welcome to 'What's the Big Deal?' – a series where I'll be breaking down big deals in the capital markets sphere for rookies like me. If you're interested in capital markets, corporate mergers & acquisitions (M&A), or working for a law firm with a corporate law offering – watch this space!

In today's edition, I'll be breaking down the recent record-breaking Electronic Arts (EA) take-private and its industry and market impacts. If you have no idea what any of these words mean beyond a hazy sense of who EA are, don’t be deterred – this article is for you!

So, what's the deal?

Dubbed the largest take-private in history, video game company EA announced at the end of September that it was going private via a record-breaking $55 billion leveraged buyout (LBO) involving a consortium of big investors. Among this consortium are the Saudi Arabian Public Investment Fund, the country's sovereign wealth fund (PIF), American private equity firm Silver Lake, and US President Donald Trump's son-in-law Jared Kushner's private equity firm Affinity Partners.

The deal will be financed by $36 billion in equity from the investor consortium mentioned above, alongside a $20 billion loan from JP Morgan – the largest debt commitment ever made by a single bank for such a deal.

Breaking it down

1. Take-private

There are two types of companies: public and private.

Public companies, such as EA, have shares or stocks – these are units of ownership in the company. They’re also called equity (if you've studied equity law, you'll know this is because these units give you an equitable interest in the company). These shares are listed publicly on a stock exchange, where they can be exchanged, bought and sold. As they’re listed on a public stock exchange, anyone can buy shares and become a shareholder.

Private companies, on the other hand, are funded by a mix of sources including their owners, private equity firms, and banks. If they have shares, these are privately owned and cannot be publicly listed.

A take-private, is the process of turning a public company into a private one. All of the company’s public shares will be purchased and it’ll no longer be traded on a stock exchange. The total purchase price of the company must be paid out to the existing shareholders. These shareholders then have more money that can be used to buy other stocks and bonds or re-deployed back into the market as they look for the next big investment.

Understand this and you understand the crux of the deal. Instead of being funded by members of the public purchasing its shares, the stability of which depends on market conditions, EA's business will now receive a steady amount of private funding from a consortium of investors – PIF, Affinity and Silver Lake – alongside the loan from JP Morgan.

2. Leveraged buyout

A buyout is the acquisition of a controlling stake in a company. A LBO is where one external company acquires another and is financed mostly through borrowed funds (like loans).

Since the acquisition is funded mostly by loans, the acquired company takes on this debt and must repay it over time using its own earnings and assets. This can be done in several ways, including:

• a simple down payment if the company has enough;
• investors cutting costs or improving sales; or
• the acquired company being sold by the acquiring company at a higher amount than acquired.

So, what does this mean for EA? The $20 billion loan from JP Morgan taken out by the consortium to finance this acquisition is what makes this transaction a leveraged buyout. It’s the largest-ever private equity LBO of all time, across all industries. EA will have to repay this amount over the course of the investment period.

3. Consortium

In this context, a consortium is a group of investors, typically one or more private equity firms, that work together to finance and manage an acquisition. Here, this is PIF, Affinity Partners and Silver Lake.

4. Equity and loans

There are two types of finance, debt and equity. For the purposes of keeping it simple, they can be summarised in this way: debt finance consists of loans and equity consists of shares – selling interest in a company. Both can be used to finance a company, so when a public company needs more money, it can consider either a loan or listing shares to sell to members of the public.

EA's shift from public to private marks a shift in focus from equity to debt finance. Where, as a public company, it previously funded itself through members of the public buying shares, it’s now being funded through the cash from the consortium and $20 billion loan from JP Morgan, which it’ll ultimately have to repay.

With all this in mind, it might be helpful to reread the deal again, bearing in mind each of these definitions, before moving onto the next section – to refresh your memory and give you a better grasp of what actually took place before we move onto the analysis.

Who are the players?

Whether you're a newbie to private equity or (like me) a non-gamer, some of the names above may be unfamiliar to you. It helps to have context when reading about a deal – use this section to orient yourself in the industry in which this takes place and better understand the nature of the deal.

EA: for those not big on gaming, this is a video game giant responsible for titles like FIFA (now EA Sports FC) and The Sims, to name a few.

Silver Lake: an American investment firm with specialism in the technology and IT sectors.

Public Investment Fund: Saudi Arabia's state-owned investment fund.

The purpose of state investment funds is to invest in real and financial assets (such as stocks and bonds and real estate) in order to manage and invest a country's surplus wealth for the benefit of its economy and citizens.

What prompted the take-private?

EA's decision to 'go private' was driven by several factors:

1. Access to 'patient capital’: the investors involved, particularly PIF, are known for their patient capital. As its name suggests, patient capital is a type of long-term (patient) investment in growth-oriented businesses, where the investor expects financial returns over a long period rather than immediately. Access to this flexible capital and support is attractive to companies as it removes the pressure of forcing short-term results. It also offers the business greater flexibility in the timeline of its structural goals: such as shifting development focus, restructuring studios and investing in new technology like AI.
2. Deep sector expertise: the investors, particularly Silver Lake, possess significant sector experience and international networks across the gaming and entertainment industries. EA can utilise this to unlock new growth opportunities and improve fan engagement.
3. Big premium for shareholders: according to the Financial Times, EA's stock on public markets had stagnated for the five years prior to the deal. Going private removed the uncertainty of relying on public markets, while the deal specifically increased the company's stock just before the news broke, as investors offered EA shareholders $210 per share in cash – a massive and immediate return on investment.
4. Greater control and less complexity: as a private company, EA can now prioritise long-term strategic projects with long-term returns or even restructurings without fear of immediate stock price drops. The company may also save money by eliminating the regulatory compliance costs publicly listed companies require.

What does this mean for…

The client?

Funding new games

The $20 billion loan taken out to finance this deal will, as noted above, need to be paid back. One possible effect of this is that it may eat into the company's ability to invest in new games, as it leverages the revenue generated by its already successful titles such as EA Sports FC and Battlefield 6 to serve the debt. This could negatively impact the company's relationship with consumers, who have previously complained about the company's failure to innovate.

Layoffs

One of the possible effects of the LBO is restructuring at EA studios, in order to serve the debt. This could manifest in the form of closed studios and lost jobs. It's worth noting that this would not be out of the ordinary in the gaming industry, an industry that has seen thousands of layoffs in the last few years, with approximately 3000 of those in 2025 alone.

The gaming industry?

Following the trend

This transaction follows a series of other large LBOs in the gaming sector, such as Microsoft's $69 billion purchase of Call of Duty, alongside consolidation trends (where fewer, larger companies dominate a market through M&A) across the wider creative sector as a whole.

AI in the gaming industry

Using AI to cut costs is another potential route for the company to repay its debt. If EA takes this route, the quality of its games may be impacted – posing a larger threat to the business and even the industry at large, especially considering the sensitivity of game players to the quality and content of games, as noted by Ubisoft CEO Yves Guillemot.

Saudi Arabia's growing presence

This take-private also marks Saudi Arabia's increased presence in the gaming industry, signified by its previous acquisition of popular mobile games like Pokémon Go and stakes in other big gaming companies like Nintendo and Take-Two Interaction. This move aligns with the country's Vision 2030, the core aim of which was to reduce economic dependence on oil. However, it also means the country may now be a major financial force influencing the direction of the world's most popular franchises.

Creative freedom

On the other hand, it could be argued that, in freeing EA from public market pressures, this move could improve game quality and allow the company to take more creative risks and make more long-term investments.

The markets?

Risk appetite in private equity and banking

The size and scale of the $20 billion loan used to finance this transaction acts as a signal of available capital and appetite for risk in the private equity and banking sectors, indicating that there is much private capital available for mergers and acquisitions. This could possibly indicate more large corporate takeovers in future.

Sector rerating

The price paid for EA sets a new high standard for the gaming industry. This will affect other gaming companies and their stock, the prices of which may increase as investors anticipate similar high-premium buyouts. This could also spark increased investor interest in the sector, making other gaming companies potential targets for similar acquisitions.

Trends

This deal highlights a growing trend, especially across creative industries, of major companies being taken private.

Why should you care?

If you're a gamer who enjoys any of EA's wide list of titles, and you notice a shift in the quality or type of projects they put out in the foreseeable future – hopefully this article offers a glimpse into why.

If you're an aspiring corporate solicitor, I’d advise you to use this article as an example of how to understand and analyse a deal. First, by breaking down the component parts and identifying concepts you don't understand, and then by examining the purpose and implications of the transaction, starting small (with the client), then expanding.

Whether your interests lie with gaming or corporate law (or both), I hope this blog gave you some insight into the wider – and finer – implications of EA's take-private!