The business reach of US President Donald Trump’s family continues to expand.
Electronic Arts (EA), one of the largest video game publishers, is being acquired and taken private (it has been a public company since 1990) in a $55 billion deal led by an investor group comprising Saudi Arabia’s Public Investment Fund (PIF), Silver Lake, and Affinity Partners. Trump’s son-in-law Jared Kushner is the CEO of Affinity Partners, a private equity firm.
The deal is the second most valuable gaming purchase in history, following Microsoft’s $68.7 billion deal to buy Call of Duty publisher Activision Blizzard, which faced significant regulatory hurdles.
Expected to close in the first quarter of EA’s 2027 fiscal year, it may have ramifications on the types of games the company invests in the future and the people who develop them. EA, founded in 1982 by former Apple employee Trip Hawkins, is known for popular games such as Battlefield, EA Sports FC, Madden, and The Sims.
The deal showcases how Saudi Arabia is trying to diversify beyond oil into sports and gaming, which have the youth culture at its heart. PIF, Silver Lake and Affinity Partners agreed to pay $210 per share in cash, a 25 per cent premium to where EA traded before the talks leaked on Friday. Bloomberg reports that JPMorgan Chase & Co. is providing $20 billion of debt, the largest debt commitment for a buyout ever.
“Leveraged buyouts leverage debt, which usually means more layoffs, smaller budgets for growth, and fewer risks,” said Mona Ibrahim, former lead counsel at leading software and video game developer Epic Games, in a post on LinkedIn.
“For an industry that thrives on invention, this seems problematic.”
Soon after the completion of the Activision Blizzard deal in October 2023, Microsoft laid off 1,900 staffers across Activision Blizzard and Xbox, and Blizzard’s president left the company. Further, an in-development survival game was cancelled.
Since President Trump has been back in the White House, a lot of money has flowed into Trump family companies (or those with his backing). It includes real estate, a cryptocurrency and a private club slated to open in Washington with a $500,000 membership fee. $TRUMP is the family’s cryptocurrency, run by Donald Trump Jr. Qatar agreed to help partially finance a Trump-branded beachside golf and luxury villa project. LIV Golf, the new Saudi-backed golf league, hosted a professional tournament at Trump National Doral in Florida earlier this year.
The EA deal comes at a time when the video-game industry is going through its motions. During the initial pandemic lockdowns, gaming culture reached new heights but the business is no longer the same, while game prices have accelerated. Many players are sticking with old favourites rather than purchasing new titles, leading to poor sales and widespread layoffs in the gaming industry.
By going private, there will no longer be the focus on quarterly earnings and investor demands. The company’s next game, Battlefield 6, is set to release on October 10.