Recent filings suggest it owns more than 90% of Saudi Arabia's Public Investment Fund (PIF). EA Under the current procurement plan. The deal has drawn a lot of attention and speculation even before it's official, with many inside and outside of the gaming industry questioning how it might affect 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 split between investors.
Shortly after news of the deal leaked, EA confirmed it had been acquired for $55 billion in the largest leveraged buyout in history, according to a Wall Street Journal report. If all goes according to plan, EA stocks will no longer be available for public trading, with a small group of major investors taking full ownership of the company. That group includes PIF and private equity firms Silver Lake and Affinity Partners, but it now looks like one of the three will have a much larger ownership stake than the others.
EA releases official statement on $55 billion purchase
EA releases an official statement to employees and other stakeholders about its recent $55 billion purchase and how it may affect the company.
Saudi Arabia's PIF will reportedly own more than 93% of EA once the purchase is finalized.
A new report from the Wall Street Journal alleges that PIF will own 93.4% of EA under the current deal. The remaining 6.6% will not be split equally between the other two investors, either, with Silver Lake taking 5.5% of the company and Affinity Partners owning 1.1%. Earning that stake in the gaming giant will reportedly cost $29 billion from the PIF, an eye-watering price tag that would be even higher if Saudi Arabia's EA didn't already own a $5.2 billion stake. Such a big slice of the pie should also help the fund amid reports that the PIF is reportedly running short on funds after the EA deal, despite it being backed by one of the world's wealthiest nations.
The report cites an antitrust filing in Brazil for these figures. Given EA's major presence around the world, EA's purchase will require regulatory approval from several nations before closing. Keeping this in mind, more such documents are likely to emerge revealing more about the deal as the legal process continues. Those regulatory hurdles could also threaten acquisitions. At least two US senators have criticized the EA deal for 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 say whether these concerns will ultimately block the purchase or affect the specifics of the deal, and if Microsoft's Blizzard acquisition is anything to go by, things will take a long time, possibly years, to resolve.
Acquiring a reported 93.4% stake in EA is just the latest in Saudi Arabia's trend of 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, although the International Olympic Committee and the nation canceled that deal weeks after news of EA's purchase broke. It's unclear why the Olympic deal fell through, but the nation still hosts the Esports World Cup each 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 on 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 play out in the real world, fans will have to wait and see what happens as the purchase makes its way through the regulatory process.
