Redwood City, Calif.-based Electronic Arts Inc., the maker of “Madden NFL” and “The Sims,” is set to be acquired for about $55 billion, in the latest example of change amid a slowdown in the video gaming industry.
The massive deal, which would be the biggest leveraged buyout in history, is backed by Saudia Arabia’s Public Investment Fund, as well as private equity firms Silver Lake and Affinity Partners. It is expected to close next year, pending shareholder and regulatory approvals. Affinity Partners is run by President Trump’s son-in-law, Jared Kushner.
The announcement comes as the video gaming industry is undergoing consolidation and is facing increased competition as it struggles to return the high growth rates it saw during the COVID-19 pandemic.
“Together with our partners, we will create transformative experiences to inspire generations to come,” said Andrew Wilson, EA’s chairman and CEO in a statement. “I am more energized than ever about the future we are building.”
EA stockholders will receive $210 per share in cash, a 25% premium over the stock’s closing price of $168.32 per share on Thursday. The company’s shares had climbed about 15%, in line with the Nasdaq Composite Index, from January to the middle of last week before the news of the acquisition plans came out.
After the deal is completed, the company will be taken private.
Wilson, who has been CEO since 2013, will remain in his position and EA’s headquarters will continue to be in Redwood City.
The video game industry received a boost during the COVID-19 pandemic as people looked for ways to entertain themselves at home. But since then, many companies have undergone cuts as they adjust to increased production costs and the concentration of demand on a smaller number of mega-hit, live-play games.
While video games remain popular, and some franchises are seeing success in their transition to film or series, EA’s annual revenues have been stagnant over the last three fiscal years, fluctuating between $7.4 billion and $7.6 billion.
Earlier this year, EA closed several hundred positions, including around 100 jobs at L.A.-based video game development studio Respawn as part of its “long-term strategic priorities.” In 2024, the company said it planned to cut 5% of its workforce after shedding jobs a year earlier.
The company has prioritized its investment behind its biggest franchises and touted better-than-expected contributions in its first quarter from EA Sports and video game “Apex Legends.” The company reported $1.67 billion in net revenue for its first quarter, ended June 30, representing a 1% increase from the same period a year earlier.
Players are spending more of their time on fewer games and then “everything else in the middle feels like it’s getting squeezed,” said Andrew Marok, digital media analyst for financial services company Raymond James.
“With development costs and budgets continuing to rise, you need a larger scale audience to make a game profitable than you used to, and so I think consolidation helps with that,” Marok added.
A major recent deal occurred in 2023, when Activision Blizzard was snapped up by technology powerhouse Microsoft for nearly $69 billion.
“When that closed, really nothing was kind of off the table,” Marok said. “That was a very big acquisition and so that kind of reset the bar for what was possible in the industry.”
Michael Pachter, a managing director of strategic planning at Wedbush Securities, said EA has struggled with growing in mobile gaming over the years, despite acquiring companies such as Codemasters and Glu Mobile.
Meanwhile, Saudia Arabia’s PIF is involved in various mobile gaming companies, including Culver City-based Scopely, and its increased ownership in EA will likely help the company gain more traction in the mobile space, Pachter said. Scopely acquired Niantic’s games portfolio in March, including “Pokémon Go.”
“They’re a company ripe to be taken over,” Pachter said of EA, adding, “It’s a good win for EA shareholders” and a “win for consumers.”
Saudi Arabia has invested in the video gaming industry as a way to help grow jobs in that sector in its country, Pachter said. The country plans to use PIF to invest $38 billion in that category by 2030, according to Bloomberg.
“PIF has demonstrated a strong commitment to these sectors, and this partnership will help further drive EA’s long-term growth, while fueling innovation within the industry on a global scale,” said Turqi Alnowaiser, PIF’s deputy governor and head of international investments, in a statement.
Analysts say the growth of AI technology will also affect the industry as developers look to leverage those tools to make production more efficient.
If the transaction closes as anticipated, it will end EA’s 36-year history as a publicly traded company that began with its shares ending their first day of trading at a split-adjusted 52 cents.
The IPO came seven years after EA was founded by former Apple employee William “Trip” Hawkins, who began playing analog versions of baseball and football made by Strat-O-Matic as a teenager during the 1960s.
The Associated Press contributed to this report.