Recent filings indicate that Saudi Arabia's Public Investment Fund (PIF) will own more than 90 percent EA according to the current redemption plan. The deal has attracted considerable attention and speculation since before it was even official, with many inside and outside the gaming industry questioning how it might affect the video game giant and the industry as a whole. While much remains unclear about EA's privatization, a new report sheds light on how ownership will be divided among investors.
Shortly after news of the deal leaked to the Wall Street Journal, EA confirmed it had been acquired for $55 billion in the largest leveraged buyout in history. If all goes according to plan, EA's stock will no longer be available for public trading and a small group of large investors will take full ownership of the company. The group is made up of PIF and private equity firms Silver Lake and Affinity Partners, but it now looks like one of the three will have a much larger ownership stake than the others.
EA releases official announcement of $55 billion buyout
EA is releasing an official statement to employees and other stakeholders about its recent $55 billion buyout and how it could affect the company.
The Saudi Arabian PIF will reportedly own over 93% of EA once the buyout is completed
A new Wall Street Journal report claims PIF will own 93.4% of EA under the current deal. The remaining 6.6% will not be split equally between the other two investors, with Silver Lake taking 5.5% of the company and Affinity Partners owning 1.1%. Earning that stake in the gaming giant will reportedly cost PIF $29 billion, a eye-watering price tag that would be even higher if Saudi Arabia didn't already have a $5.2 billion stake in EA. Such a huge slice of the pie should also help the fund after reports emerged that the PIF is reportedly running out of funds after the deal with EA, despite having the backing of one of the world's richest countries.
The report for these numbers cites an antitrust filing in Brazil. Due to EA's significant global footprint, EA's buyout will require regulatory approval from several countries prior to closing. With that in mind, more such documents that reveal more about the deal are likely to come out during the court process. These regulatory hurdles can also put the acquisition at risk. At least two US senators have criticized the EA deal for “national security risks”, citing how Saudi Arabia could use its ownership of EA to access sensitive data and gain influence over a global audience. It's still too early to tell if these concerns will ultimately stop the buyout or affect the specifics of the deal, and if Microsoft's acquisition of Blizzard is anything to go by, it will take a long time, probably years, for things to settle.
The acquisition of a purported 93.4% stake in EA is just the latest in a trend of Saudi Arabia increasing its involvement in the gaming industry. PIF is also a major shareholder in Nintendo, and Saudi Arabia was originally slated to host the first eSports Olympics, though the International Olympic Committee and the nation scrapped that deal weeks after news of EA's buyout emerged. It's not exactly clear why the Olympic deal fell through, but the country still hosts the esports World Cup every year.
At the time of writing, none of the parties involved in the EA transaction have commented on the new news. However, EA had previously issued a statement on the deal in general, promising its employees that its mission would not change and that its creative freedom would remain intact. As for how things will play out in the real world, fans will have to wait and see what happens as the buyout goes through the regulatory process.
