EA has made the biggest move in the video game business since Microsoft acquired Activision Blizzard King.
As explained by GameSpot, they have finalized a leveraged buyout to the tune of $ 55 billion. This is the largest leveraged buyout in the history of business, although Microsoft still paid more to acquire Activision at $ 75 billion.
The buyers are a consortium that includes Saudi Arabia’s Public Investment Fund (PIF), Jared Kushner’s company Affinity Partners, and equity company Silver Lake.
The PIF takes a large majority of EA’s shares, and the deal also includes an agreement to pull EA from the stock market.
However, a leveraged buyout involves borrowing money to complete a sale. So now that this deal has gone through, EA immediately incurs a huge amount of debt, which its new owners will have to resolve without the stock market.
This is the reason that speculation is high that layoffs and studio closures are coming up next. While we don’t know exactly why EA chose this route, it suggests that they were trying to avoid an even worse fate in their original position.
