Anna Tarasheva Transaction of the Quarter Volume 2

BY DLS • OCT 26, 2026 • 5 MIN READ

Gaming giant Electronic Arts (EA) announced a US$55bn leveraged buyout in late September. It represents the largest transaction of its kind, and the biggest all-cash deal of the year. [1] The transaction surpasses even the US$45 billion leveraged buyout of TXU Energy in 2007, which later collapsed into bankruptcy, and ranks among the entire gaming sector’s most historically significant deals, alongside Microsoft’s $69bn acquisition of Activision Blizzard in 2023 [2] [3]. EA, the maker of FIFA (now EA Sports FC) and The Sims, will now transition to private ownership, with the deal timeline expected to close in early 2027 [1].

Financing

The consortium of stakeholders acquiring 100% of EA comprises Saudi Arabia’s Public Investment Fund (a $1 trillion value wealth fund), the private equity firm Silver Lake, and Affinity Partners (established by Jared Kushner, son-in-law of US President Donald Trump). With shares valued at $210 each, the financing structure consists of $36b billion in collective equity contributions, combined with a $20 billion debt package from JPMorgan Chase. [3] [4] [5] Saudi’s PIF is reported to be continuing its existing 9.9% equity stake in EA, rolling it into a new private company, rather than cashing out. [3]

JPMorgan’s $20 billion debt commitment is an unprecedented figure for a single bank in this kind of transaction. Due to the leveraged structure (a leveraged buyout means a portion of the deal is financed through debt), EA will assume this $20 billion burden of debt. This will generate its own risks – as occurred when Toys R Us was purchased by private equity firms in 2005 in a $6.6 billion deal that riddled the company with $5 billion in debt. [4] People involved in the transaction told the Financial Times that “AI-based cost cuts will significantly boost EA’s profits in the coming years,” which speaks to the way that artificial intelligence is expected to help the consortium manage the debt by cutting EA’s operational costs [1].

EA and the Video Game Industry

Founded in 1982 by a former marketing director of Apple, EA reported $7.5 billion in revenue last year [3] [5]. However, the company has faced operational challenges, suffering a 17-year stock drop primarily due to problems with its Global Football business [5]. Contextually, whilst the video game industry is the largest entertainment industry globally, being worth more than film and music combined, the market for video games has faced slower growth amid a global cost of living crisis [2]. In response to its declining growth and turbulent industry backdrop, EA cancelled some of its games and has made nearly 2,000 workers redundant since 2023 [6]. Moreover, The Conversation notes that EA has won ‘The Worst Company in America’ award twice, and has faced criticism for poor labour practices [6].

This raises concerns about the impact this transaction will have on the wider industry. From game cancellations and closures of studios to large layoffs and cost-cutting strategies such as changes in creative direction, critics worry this transaction will not only impact employment but also the quality of the gaming experience.

Strategic Rationale

Despite this, the consortium of investors has maintained that EA has a “world-class management team” with a “premier sports franchise” and “strong and scaling free cash flow” [1]. Freedom Capital Markets analysts stated the deal “should enable EA to increase its focus on long-term growth opportunities that may have been viewed as too risky or expensive as a public company” [2]. For PIF, this acquisition advances Saudi Arabia’s economic diversification strategy, and develops its existing investment in video games (as it already holds positions in EA and maintains stakes in Nintendo). Saudi Arabia has stated it seeks to become a “global hub for games and sports” [6] [2]. NYU professor Joost van Dreunen notably remarked that “gaming is the new oil”, connecting the acquisition to Riyadh’s Vision 2030 strategy and its mission to become a global gaming hub. [4].

Reconciling these different stakeholder interests around governance structure, board composition and the timeline for a future exit would have represented a negotiation challenge during the structuring phase of the deal.

Potential Concerns and Challenges

The Saudi investment has attracted scrutiny regarding human rights considerations. Citing concerns over free speech, discrimination against women, members of the LGBTQ+ community, and journalists, Game Developer comments that “Saudi Arabia has a notoriously bad human rights record, according to Amnesty International” [4]. The deal could therefore serve to increase the cultural legitimacy of Saudi Arabia [4], with the deal serving as “good PR for a country that has been accused of human rights abuses” [6].

Moreover, considering the fact that EA holds large amounts of user data from millions of players globally, the deal has implications on data privacy and foreign access to sensitive consumer information. This could incur regulatory intervention and conditions being imposed upon the deal, such as restrictions on data handling and government access arrangements.

Legal Advisors

The transaction involved multiple law firms. Kirkland & Ellis led the consortium alongside Gibson Dunn (advising PIF), Latham & Watkins and Simpson Thacher (representing Silver Lake), Sidley Austin (acting for Affinity Partners), and Wachtell (advising EA) [3].

Assessment

EA’s leveraged buyout represents the quarter’s most significant transaction based on its value, financing structure complexity, and the strategic implications for the gaming industry and Saudi Arabia. The deal’s success will depend on EA’s ability to manage its substantial debt obligations and navigate stakeholder concerns regarding employment, creative direction and regulatory review.