Electronic Arts is closing in on a massive $50 billion deal to go private that would shatter Wall Street records. The gaming giant's stock jumped 15% Friday as investors including Saudi Arabia's Public Investment Fund and Silver Lake prepare what could be the largest leveraged buyout in history, surpassing the previous $45 billion record.
Wall Street's biggest buyout record is about to get obliterated. Electronic Arts sent shockwaves through the gaming industry Friday as reports surfaced that the company is nearing a historic $50 billion deal to go private, sending shares rocketing 15% in a single trading session.
The massive transaction would involve a consortium led by Saudi Arabia's Public Investment Fund alongside private equity giant Silver Lake, according to The Wall Street Journal. Sources close to the deal suggest an announcement could come as early as next week, marking a seismic shift for one of gaming's most established publishers.
This isn't just another corporate acquisition - it's a complete rewriting of leveraged buyout history. The proposed deal would dwarf the previous record holder, the $45 billion buyout of TXU Energy back in 2007, by a massive $5 billion margin. For context, leveraged buyouts use predominantly debt financing to fund acquisitions, a strategy that's become increasingly popular as private equity firms hunt for growth in established markets.
The timing couldn't be more strategic. EA has been riding high this year with its stock already up 32% before Friday's surge, driven by strong performance from flagship franchises like The Sims, Madden NFL, and FC (the soccer game formerly known as FIFA). The company's steady cash flow from these recurring sports titles makes it an attractive target for debt-heavy buyout structures.
But this deal represents something bigger than just financial engineering. Saudi Arabia's Public Investment Fund has been aggressively expanding into gaming as part of its Vision 2030 diversification strategy, pouring billions into companies like Activision Blizzard before Microsoft's acquisition. The kingdom sees gaming as a cornerstone of its entertainment sector ambitions.
Silver Lake brings serious tech buyout credentials to the table. The firm has orchestrated major deals across the technology landscape and understands how to extract value from established software companies with recurring revenue models. Their partnership with the Saudi fund creates a formidable combination of capital and expertise.
The gaming industry has been ripe for consolidation lately. We've seen acquire Activision Blizzard for $69 billion, snapping up Bungie, and countless smaller studios getting absorbed by larger publishers. But taking a major public gaming company private represents a different strategic play altogether.
