Buyout of Electronic Arts: Saudi Arabia covers over 90 percent
EA is being bought by a private equity consortium comprising three firms. The new power dynamics are now becoming known – and they appear to be very one-sided.
(Image: Shutterstock.com/ Michael Vi)
The Saudi sovereign wealth fund PIF is reportedly bearing over 90 percent of the costs for the buyout of Electronic Arts. This is reported by the Wall Street Journal based on documents submitted to Brazilian authorities in the course of the antitrust investigation. The figures show how unevenly the power dynamics within the buyer consortium are distributed.
EA is being bought by a consortium of three parties. In addition to the Saudi sovereign wealth fund, these include Silver Lake and the investment firm Affinity Partners, founded by Donald Trump's son-in-law Jared Kushner. According to the Wall Street Journal, however, the PIF is bearing the lion's share of the acquisition costs and is expected to own 93.4 percent of the US publisher after the deal. Silver Lake is expected to cover 5.5 percent of the costs, and Affinity the remaining 1.1 percent. The Saudi sovereign wealth fund has also invested directly in Silver Lake and Affinity.
Concerns about influence
The Wall Street Journal's report is likely to further fuel the fears of critics of the deal, who express concerns about Saudi Arabian influence on the US game publisher. EA itself has already downplayed these fears in an employee FAQ, stating that it will retain creative control even after the deal.
"The consortium believes in our vision, our leadership, and the strength of our teams. It is investing in EA because it believes we are uniquely positioned to lead the future of entertainment," EA writes in the document. "EA will retain creative control, and our proven creative freedom and player-first values will remain fully intact."
55 billion US dollars
The consortium wants to buy Electronic Arts for 55 billion US dollars and take it private. The transaction is expected to be completed in the next five to eight months. The sum of 55 billion US dollars is divided into an equity investment of 36 billion US dollars and a debt component of 20 billion US dollars. According to the Wall Street Journal's calculations, the PIF would therefore have to put 29 billion US dollars on the table, as the sovereign wealth fund already holds shares in EA worth approximately 5 billion US dollars.
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