Saudi Arabia's Public Investment Fund (PIF) is expected to own more than 90% of the shares, according to recent filings. EA According to the current purchase plan. The deal has sparked considerable interest and speculation even before it became official, with many people inside and outside the gaming industry questioning what impact it could have on the video game giant and the industry as a whole. While much remains uncertain about EA's privatization, a new report sheds light on how ownership will be distributed among investors.
Shortly after news of the deal leaked as reported by the Wall Street Journal, EA confirmed it would be acquired for $55 billion in the largest leveraged buyout in history. If all goes according to plan, EA stock will no longer be publicly traded and a small group of major investors will have full ownership of the company. The group is made up of PIF and private equity funds Silver Lake and Affinity Partners, but it now looks like one of the three will have a much larger ownership stake than the other.
EA Announces Official Statement About $55 Billion Acquisition
EA issues a formal statement to employees and other stakeholders regarding its recent $55 billion acquisition and how it may impact the company.
Saudi Arabia's PIF will reportedly own more than 93% of EA after completing the acquisition.
According to a new report from the Wall Street Journal, PIF will own 93.4% of EA under the current agreement. The remaining 6.6% is not evenly distributed between the other two investors. Silver Lake holds 5.5% of the company and Affinity Partners owns 1.1%. Acquiring a stake in the gaming giant will reportedly cost PIF $29 billion. This would be a much higher price tag if Saudi Arabia didn't already have a $5.2 billion stake in EA. Such a huge slice of the pie will also help the PIF, amid reports that it is short on funds following the EA deal, despite having the backing of one of the world's richest countries.
The report cites an antitrust lawsuit filed in Brazil for these figures. EA's acquisition will require regulatory approvals in several countries before closing, given EA's major presence globally. With this in mind, it is likely that as the legal process progresses, more documents will be released, revealing more information about the transaction. These regulatory hurdles can also threaten acquisitions. At least two U.S. senators have criticized the EA deal as a “national security risk,” 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 whether these concerns will ultimately kill the acquisition or impact the details of the deal, and if Microsoft's acquisition of Blizzard goes through, it will likely take a long time, perhaps years, for the issues to be resolved.
Acquiring a 93.4% stake in EA is the latest in Saudi Arabia's growing involvement in the gaming industry. PIF is also a majority shareholder of Nintendo, and Saudi Arabia was originally scheduled to host the first Olympic esports games, but the International Olympic Committee (IOC) and the country canceled the deal weeks after news of the EA acquisition broke. It is unclear exactly why the Olympic agreement failed, but our country still hosts the eSports World Cup every year.
As of this writing, none of the parties involved in the EA deal have commented on this new report. However, EA previously released a statement regarding the deal in general, promising employees that its mission would not change and that 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 acquisition goes through the regulatory process.
