Affinity Partners, PIF, and Silver Lake’s $55bn Acquisition of Electronic Arts
- amansp2006
- 4 days ago
- 6 min read
Updated: 3 days ago
By Anastasia Malikova, Dennis Malaj, Gauri Khanna, Sarah Lee (LSE); Aman Prasad, Ibrahim Demir, Jiaqi Tang, Oli Greenhalgh (University of Birmingham)
Photo: Florian Olivo
Overview of the deal
Acquirer: PIF, Silver Lake, and Affinity Partners
Target: Electronic Arts (EA)
Total Transaction Size: $55 billion
Closed Date: Expected in Q1 FY27
Target Advisors: Goldman Sachs & Co. LLC (Financial); Wachtell, Lipton, Rosen & Katz (Legal)
Acquirer Advisors: J.P. Morgan Securities LLC (Financial); Kirkland & Ellis LLP [PIF]; Latham & Watkins, Simpson Thacher [Silver Lake]; Sidley Austin [Affinity Partners] (Legal)
In the largest-ever private equity buyout, Electronic Arts is being taken private by a consortium led by PIF, Silver Lake, and Affinity Partners for $55 billion at $210/share, representing a 25% premium. The transaction, financed with ~$36 billion of equity from PIF, and ~$20 billion of debt financing underwritten by JPMorgan, enables EA to pursue long-term strategic initiatives free from public market pressures. However, the resulting pro forma net debt-to-EBITDA ratio of approximately 9.95x and significant geopolitical/regulatory risks create narrow margins for execution.
The consortium sees opportunity in EA’s iconic franchises and global audience, and the deal allows them to pre-empt competition in a consolidating games industry. For PIF, the deal aligns with its broader ambition of becoming a major player in global gaming and entertainment ecosystems.
For EA, the transition to private ownership enables the company to accelerate its strategic ambitions in gaming, entertainment, and digital experiences, free from the short-term pressures of quarterly public shareholder scrutiny. It also provides enhanced economies of scale, greater long-term investment in digital and interactive experiences, and more flexible tax, financing and operational strategies.
"The transaction represents the largest all-cash sponsor take-private investment in history, with the consortium closely partnering with EA to enable the company to move faster and unlock new opportunities on a global stage." - Electronic Arts Inc.
Company Details (Acquirers - PIF, SilverLake, Affinity Partners)
Public Investment Fund (PIF)
PIF is the sovereign wealth fund of the Kingdom of Saudi Arabia, tasked with driving economic diversification, employing capital domestically and internationally, and supporting the government’s Vision 2030 agenda.
Founded: 1971
Headquarters: Riyadh, Saudi Arabia
CEO/Governor: Yasir Al-Rumayyan (Governor)
Number of employees: ~2,962 (end 2024)
Recent Transactions: Acquisition of a 54% stake in the MBC Group (September 2025), acquisition of Niantic (March 2025).
Silver Lake:
Silver Lake is a global private equity firm specialising in technology and technology-enabled investments. It partners with management teams of large-scale companies and seeks to drive growth and transformations in mature technology businesses.
Founded: 1999
Headquartered: Menlo Park, California, United States
Co-CEOs: Egon Durban and Greg Mondre
Number of Employees: ~1,200
Recent Transactions: Acquisition of Endeavour (March 2025), acquisition of 51% stake in Intel's Altera unit (September 2025).
Affinity Partners:
Affinity Partners is a U.S.-based investment firm founded by Jared Kushner. It focuses on growth-stage and strategic investments, especially in technology and cross-border opportunities, and is backed by substantial Middle Eastern sovereign-wealth capital.
Founded: 2021
Headquartered: Miami, Florida, USA
CEO: Jared Kushner (Founder and Managing Partner)
Number of Employees: Approx 20 (c.2021)
AUM: ~$4.8 billion (end 2024) after a ~60% jump due to a Gulf capital injection.
Recent Transactions: Acquisition of an 8% stake in OakNorth (August 2025), acquisition of a 10.7% stake in Dubizzle (October 2022)
Company Details (Target - Electronic Arts)
Electronic Arts Inc. is one of the world's largest video game publishers, known for major franchises such as EA Sports FC (formerly FIFA) and The Sims. The company operates across console, PC, and mobile platforms, with its business model increasingly driven by live services and in-game purchases alongside traditional game sales and exclusive sports licensing partnerships.
Founded: 1982
Headquartered: Redwood City, California, United States
CEO: Andrew Wilson
Number of employees: ~14,500
Market Cap: $50.23bn (as of 10/11/2025)
EV: $50.92bn
LTM Revenue: $7.29bn
LTM EBITDA: $1.66bn
LTM EV/Revenue: 6.99x
LTM EV/EBITDA: 30.77x
Recent Transactions: Acquisition of TRACAB Technologies (February 2025), acquisition of Playdemic Ltd. (September 2021), acquisition of Glu Mobile LLC (April 2021).
Projections and Assumptions
Short-Term Consequences
The announcement triggered an immediate 15% share price increase, with shareholders set to receive $210 per share, representing a 25% premium to the unaffected price. This delivers instant liquidity and large near-term gains for investors, whilst PIF is rolling over its existing 9.9% stake, demonstrating strong confidence in EA’s future.
The consortium brings deep sector expertise and committed capital to EA. PIF's position in the global gaming and esports sectors allows EA to blend physical and digital experiences whilst improving fan engagement. Silver Lake's track record of partnering with high-quality technology companies provides upfront strategic value. The transaction delivers immediate cash certainty to shareholders whilst strengthening EA's ability to continue building the franchises and experiences that define the entertainment industry.
Operationally, Andrew Wilson will remain as CEO, and EA will stay headquartered in Redwood City, ensuring leadership continuity. The near-term priority centres on navigating the delisting process from NASDAQ, which requires shareholder approval and regulatory clearance before the expected 2027 close. Wilson's transition to becoming a major shareholder reinforces alignment with value creation. In the coming months, EA will eliminate public company costs, including investor relations and SEC compliance, freeing management to focus on operational priorities and development pipelines.
Long-Term Upsides
The $55 billion take-private, financed with roughly $20 billion in acquisition debt, materially alters EA’s balance sheet but positions the company for disciplined, efficiency-driven growth. While near term, higher interest expense will compress earnings, leverage will enforce sharper capital allocation and cost control. Over the medium term, as deleveraging progresses and efficiency measures take hold, EBITDA margins should expand, underpinned by resilient live-service revenues and scalable digital economics. The focus will pivot from quarterly EPS to sustainable free cash flow growth and long-term valuation creation ahead of an eventual exit in five to seven years.
Silver Lake’s ESG approach is explicitly value-oriented. Addressing cultural and diversity challenges strengthens creative retention, while governance reforms around monetisation and data transparency reduce regulatory risk and stabilise revenue quality. Environmental initiatives, notably transitioning data centres to renewable power, align with investor expectations and can deliver structural cost benefits over time.
Industry growth remains steady with ∼5% predicted CAGR to 2028, with EA’s sports and live services underpinning above-market performance. Private ownership will enable longer-term investment in AI and cloud capabilities to offset rising development costs. Operationally, cost synergies are immediate and low-risk, removing public-company overhead and optimising procurement and technology infrastructure. In the medium-term, upsides predominantly lie in revenue expansion through transmedia and esports integration enabled by Silver Lake’s preexisting networks. Success will hinge on balancing creative freedom with private-equity discipline to deliver sustained value accretion.
Overall, the transaction creates a leaner, more focused EA with the capital structure and governance to drive long-term value. Execution discipline, not market growth, will determine whether this leverage translates into returns.
Risks and Uncertainties
The transaction introduces some significant financial and operational complexities. While the consortium brings capital and sector expertise, the deal's structure and acquisition debt levels create narrow margins for operational execution. EA will emerge with a pro forma net debt-to-EBITDA ratio of approximately 9.95x, significantly above gaming industry standards, with annual interest expenses of roughly $1.4 billion, consuming 75% of free cash flow. This constraint is compounded by debt service coverage ratios: EA's EBITDA-to-interest coverage currently stands at just 1.44x, which is below the 2.0 to 3.0x threshold typical of sustainable leveraged buyouts. This means any revenue decline exceeding 5 to 10% could destabilise the capital structure. The gaming industry's inherent cyclicality compounds this vulnerability, leaving limited room to absorb unexpected challenges.
Regulatory and geopolitical uncertainties also persist: U.S. Senate concerns regarding foreign ownership of gaming data could introduce transaction delays, triggering the $1 billion reverse break fee if closing extends beyond September 2026.
Regarding operational and talent risks, EA's own SEC filings acknowledge potential voluntary staff departures due to concerns over Saudi Arabia's human rights record, with particular risk to studios like BioWare and Maxis known for pro-diversity storytelling. Additionally, EA derives over 50% of revenue from just four franchises (EA Sports FC, Madden NFL, Battlefield, and The Sims), creating concentration risk where licensing loss, poor reception, or live-service underperformance directly threatens debt service capacity. On the other hand, the consortium's bet on business model evolution through new revenue streams (sports betting, transmedia ventures) to justify the aforementioned leverage currently remains speculative.
“Uncertainty about the effect of the merger may impair our ability to attract, retain, and motivate key personnel, and could cause customers, suppliers, financial counterparties, and others to seek to change existing business relationships with us.” - Electronic Arts Inc.