EA to Go Private, but Experts Question the Deal’s Financial Rationale

A consortium of investors led by Saudi Arabia’s sovereign wealth fund PIF and the private equity firm Silver Lake is prepared to acquire Electronic Arts for $55 billion in a leveraged buyout expected to close by 2027. However, analysts are skeptical about the deal’s financial sense and its timing.

The investment group Affinity Partners is also part of the transaction. The proposal would take all EA shares private, and institutions such as Citigroup have called the timing somewhat peculiar.

In an interview with Yahoo Finance, Citigroup managing director Jason Bazinet commented:

“The irony is that the market will soon see Battlefield 6 sales figures. If those orders are strong, buyers will demand a premium. So why make an offer right now? It might have made more sense six months ago, when Battlefield 6 outcomes were still unknown.”

The transaction would burden EA with roughly $20 billion of additional debt through a potentially high-yield, single-B loan. Bazinet’s calculations suggest the internal rate of return (IRR) is modest:

“Using consensus forecasts, the IRR would land in the low- to mid-single-digit range. Financially, that’s not particularly compelling. Perhaps the Saudi investors have strategic reasons, but economically the deal raises questions.”

Source: iXBT.games