Electronic Arts, a prominent developer of popular video games such as Madden NFL, Battlefield, and The Sims, is set to be acquired for a staggering $55 billion, marking the largest leveraged buyout attempt in history. The deal, announced on Monday, involves private equity firm Silver Lake Partners, Saudi Arabia’s sovereign wealth fund PIF, and Affinity Partners offering $210 per share to the company’s stockholders. Notably, Affinity Partners is a private equity firm led by Jared Kushner, President Donald Trump’s son-in-law.
Should the transaction proceed as planned, Electronic Arts (EA) will transition from a publicly traded company to a private entity. The total value of this acquisition surpasses the $32 billion used to privatize Texas utility TXU back in 2007. This move would conclude EA’s 36-year journey as a publicly traded company that commenced with its shares closing at a split-adjusted 52 cents on its first day of trading.
The inception of EA traces back seven years after its founding by former Apple employee William “Trip” Hawkins, who, during the 1960s, engaged in analog versions of baseball and football games by Strat-O-Matic. Since 2013, EA has been under the leadership of its current CEO, Andrew Wilson.
Furthermore, EA’s presence extends to Canada, where it acquired Burnaby, B.C.-based game developer Distinctive Software in 1991, subsequently rebranding it as Electronic Arts Canada, now known as EA Vancouver. This studio has notably produced some of EA’s most prominent franchises, including EA Sports FC and the NHL series.
Today, EA operates various video game studios and offices nationwide, including locations in Edmonton, Montreal, Toronto, and Victoria, B.C., as indicated on its website.
In a recent development, Silver Lake, one of the acquiring entities, has been involved in another high-profile deal concerning a technology company with a substantial fan base. This follows their participation in a joint venture led by Oracle that oversees the U.S. operations of TikTok’s social video platform. Silver Lake has previously engaged in notable buyouts, such as acquiring Skype in 2009 for $1.9 billion and personal computer maker Dell in 2013 for $24.9 billion.
By transitioning to a private entity, EA aims to restructure its operations without the constraints of meeting short-term financial targets often faced by publicly traded companies. Despite EA’s enduring popularity, its annual revenues have remained stagnant between $7.4 billion and $7.6 billion over the past three fiscal years. This move comes amidst the backdrop of Microsoft’s acquisition of major EA rival Activision Blizzard for nearly $69 billion in 2023, along with escalating competition from mobile game developers like Epic Games.
Typically, companies transitioning from public to private ownership undergo significant cost-cutting measures, potentially resulting in layoffs. However, there have been no explicit indications of such actions at EA. Following a 5% reduction in its workforce in 2024, EA concluded March with 14,500 employees and subsequently laid off several hundred individuals in May.
