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The Public Investment Fund will hold over 93% of the company's ownership.
"Hello everyone and welcome back to Gamereactor. Today we're going to be talking a little bit about a recent story that sort of started doing the rounds in regards to the big acquisition of EA that was announced a couple of weeks ago, a couple of months ago, something like that. The announcement, when it was revealed, mentioned that EA was to be acquired for 55 billion dollars by a sort of consortium of investors that included the Saudi Arabian Public Investment Fund that included Silverlake, which is an investment firm, and another investment firm called Affinity Partners, which is the one that's owned by Jared Kushner, a.k.a."
"the son of Donald Trump, or the son-in-law, sorry, of Donald Trump. And when that was announced, I think everyone kind of assumed that it would be somewhat of a split ownership and that everyone would have a decent slice of the pie, but it turns out that won't absolutely be the case. A new report from the Wall Street Journal, I believe, has come out and it's basically stated that Saudi Arabia, should this deal close, bear in mind, it hasn't gone through yet, obviously, it's such a big deal, it'll take some time to go through, but should this deal close, Saudi Arabia will basically just own EA. So let's take a look."
"So yeah, Saudi Arabia will reportedly own the majority of EA when the acquisition is cleared. The previously assumed consortium of investors will supposedly only possess around 7% of the massive publishing. So recently it was revealed that Electronic Arts, EA, was to be acquired by a consortium of investors that span the Saudi Arabian Public Investment Fund, PIF, and investment firms include Donald Trump's son-in-law, Jared Kushner's Affinity Partners, and also Silver Lake. So when this deal was announced, with it valued at a whopping $55 billion, it was assumed that the ownership would be quite balanced between the involved parties, but apparently it won't be at all. The Wall Street Journal has published a report wherein it claims that should the deal be completed, the PIF will own as much as 93.4% of EA, with Silver Lake getting as little as 5.5%, and Kushner's Affinity Partners getting a measly 1.1%. Essentially, should the deal be closed and approved, Saudi Arabia will own EA. As for how the deal is structured, a filing by the Brazilian antitrust regulator claims that $36.4 billion will be sorted in the form of equity, and a further $20 billion will be taken on a debt against EA. As part of the equity part, or as of the equity part, around $29 billion was supposed to have come from the PIF, with the organisation already having a $5.2 billion stake in the publisher prior to the deal being announced. It's thought that the acquisition could clear in the 2027 fiscal year, but as was proven to be the case in Microsoft's acquisition of Activision Blizzard, these kinds of behemoth deals are almost always met with unexpected hurdles. If it does clear, EA expects to retain creative control of the company. So yes, that's a big, big proportion of the company that the PIF will own. 93.4%."
"It is an astonishing amount when you actually think about it. I don't know how you can say that the PIF will own that much of the company and EA, as we know it, will remain in creative control of the company. I don't see how there's a world where those two things can exist in harmony. And as for the other partners that are involved, it wouldn't surprise me in good time if they sell their stakes and make a bit of money back from it. I don't think that you get into a deal of this scale and this standard, you know, snagging 1.1% of EA under the assumption that you're there for the long haul. I think that that is more of an investment deal and I think that you will see in time they will probably sell it to the PIF or someone else and reap the rewards that come from that. Assuming that EA starts making money and increasing in revenue once this deal is closed and in the books. But we'll have to see. But the key thing to note is again, the Saudi Arabian Public Investment Fund, they weren't just involved in this deal. They're basically the deal. I think the report also stated that Kushner's Infinity Partners was basically there as like a broker, if anything, between EA and the PIF, which is why they only have 1.1% ownership of the company should it be cleared. So again, it doesn't seem to me like it's particularly, we're getting into video games, we're getting into the business of video games. We've got a stake in EA. It just seems to me more like this is what we're doing to be involved in the deal so that we can sell it and make money and stuff like that. So it's a fascinating deal across the board here. There was a lot of antitrust concerns with Activision Blizzard being acquired by Microsoft and the idea that Microsoft would be monopolising the industry. There is no idea, there is no concern of monopolisation with the Public Investment Fund because they don't actually own that much of the video game business, whereas Microsoft and Xbox, they are sort of one of the three key console makers. They have all these other parts and the stake in the video game industry. So you can understand where the monopolisation part comes from it. But that being said, it's a very big deal and there's a lot that goes on behind the scenes and I think there's going to be a lot of things that happen in regards to this deal in the time that we're getting up to 2027 or the fiscal year of 2027 rather."
"So I think that's, does that start in April 2027? I always get confused with it, but the point is it's not going to be closing anytime soon. So don't expect to see a resolution about this in the next few weeks or months or anything like that. It's going to take time and if I had to guess, it's probably going to take even longer than that because again, $55 billion is an extortionate amount of money. But again, as we hear more about this, we're sure to keep you posted and updated and otherwise that's all the time I have."
"So thank you for joining me and I'll see you all on the next GRTV News tomorrow morning.
Take care, everyone."
