California-headquartered video game company Electronic Arts is reportedly in talks over a potential buyout worth around $50 billion.
Post the report, EA shares jumped 15%, giving EA a market cap of $48 billion. At the time of writing this post, the per share is priced around $193.
As per the reports from The Wall Street Journal floating on the internet, the buyout is discussed with Silver Lake, Saudi Arabia’s Public Investment Fund (PIF), and Affinity Partners, which is backed by PIF.
Currently, no deal has been signed. However, Bloomberg and the Financial Times reported that the buyout could be announced as early as next week, although a final agreement has not yet been reached.
It’s worth mentioning here that PIF already owns nearly 10% of the company.
In addition to EA, PIF has also invested in Take-Two Interactive, Activision Blizzard, Nintendo, and Embracer Group, while Silver Lake holds a stake in Unity.
EA recently released College Football 26, which has been well-received by both players and critics. Furthermore, EA is set to introduce Battlefield 6 later this fiscal year.
However, the company has indicated that it might see its second-quarter net bookings fall short of expectations, attributing this to current economic challenges and variability in consumer spending patterns.
If completed, the deal would mark the largest leveraged buyout in history, surpassing the $45 billion buyout of Texas Utility Group LLC in 2007, says Alastair Matchett, Investment Banking Expert, through his LinkedIn post.
J.P. Morgan is rumoured to be arranging a debt financing package exceeding $20 billion.
