Recent filings indicate that Saudi Arabia's Public Investment Fund (PIF) will own over 90% of EA under the current buyout plan. The deal has attracted a lot of attention and speculation since before it was even official, with many both inside and outside the gaming industry questioning how it could affect the video game giant and the sector as a whole. While much remains uncertain about EA's privatization, a new report sheds light on how ownership will be split between investors.
Shortly after a Wall Street Journal report leaked news of the deal, EA confirmed it was being acquired for $55 billion in the largest leveraged buyout in history. If all goes according to plan, EA shares will no longer be available for public trading, with a small group of major investors taking full ownership of the company. That group consists of PIF and private equity firms Silver Lake and Affinity Partners, but it now looks like one of those three will have a much larger stake than the others.
EA issues official statement on $55 billion buyout
EA releases an official statement to employees and other stakeholders about its latest $55 billion purchase and how it may affect the company.
Saudi Arabia's PIF will reportedly own over 93% of EA after completing the buyout
A new report from the Wall Street Journal claims that PIF will own 93.4% of EA under the current deal. The remaining 6.6% will also not be split equally between the other two investors, as Silver Lake takes 5.5% of the company and Affinity Partners owns 1.1%. Earning that stake in the gaming giant will reportedly cost PIF $29 billion, an 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 amid reports that the PIF is reportedly short of funds after the EA deal, despite having the backing of one of the world's richest nations.
The report cites an antitrust filing in Brazil for those numbers. EA's buyout will need regulatory approval from several nations before it can close, given EA's large presence worldwide. With this in mind, more such documents are likely to emerge as the legal process continues, revealing more about the deal. These regulatory hurdles could also threaten the acquisition. 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 say whether these concerns will ultimately stop the acquisition or affect the details of the deal, and if Microsoft's Blizzard acquisition is anything to go by, it will take a long time, likely years, for things to work out.
Earning a claimed 93.4% stake in EA is just the latest in a trend of Saudi Arabia increasing its involvement in the gaming industry. The PIF is also a major shareholder in Nintendo, and Saudi Arabia was originally slated to host the first Olympic eSports Games, though the International Olympic Committee and the nation scrapped that deal weeks after news of the EA purchase broke. It's unclear exactly why the Olympic deal fell through, but the nation 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 this new report. However, EA has previously issued a statement about the deal in general, promising its employees that its mission will not change and that its creative freedom will remain intact. As for how things will play out in the real world, fans will have to wait and see what follows as the purchase makes its way through the regulatory process.
