EA Acquired for $55 Billion, What the Hell Happens Now?

I’m not a business industry analyst, so I started the week saying to myself that today’s newsletter would not be dedicated to EA being purchased, but there’s really no way I can avoid it. The largest sports game maker in the world has been acquired, and we have to talk about it.

When you first got eyes on that news, you probably said, “wow, that’s a lot of money” — and it is. It’s the second largest purchase of a video game company behind Microsoft’s extended legal battle to confirm its purchase of Activision-Blizzard for around $69 billion.

After that, you probably said, “wait, who bought it?” And, yeah, that’s also weird. It’s not Microsoft. It’s not Sony. It’s not Nintendo. It’s, the PIF, Silver Lake, and Affinity Partners.

Who the hell are they?

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Well, they’re not exactly beacons of ethical business practices, and they’re not companies in the business of making games — albeit PIF certainly owns plenty of stock in other game companies. PIF is backed by Saudia Arabia’s Public Investment Fund. Affinity Partners was co-founded by Jared Kushner. And then Silver Lake is another Silicon Valley private equity firm that specializes in leveraged buyouts — more on that later.

In short, EA is going “private” after being purchased by private capital in the largest leveraged buyout in history, and most assume the deal will pull through (even though a large chunk of it is by foreign investors) because Jared Kushner is Donald Trump’s son-in-law.

To be clear, I don’t blame EA shareholders for taking this deal. To use an example many of you probably are aware of already, Twitter was purchased by Elon Musk in a similar fashion. The shareholders’ responsibility is to the stock price, and so if someone comes in and goes above and beyond the stock price, you essentially have to listen and take the deal.

It does not mean the purchase is in the best interest of the company — and this almost undoubtedly will not be in the best interest of EA’s long-term outlook — but in terms of the value of each share of stock, it’s great value.

All of this is to say, there is a certain irony to EA being purchased after it was the “big bad” who would buy companies and then ruin them throughout the 2000s.

The Phantom Menace might be a terrible movie, but as we’re want to remember, there’s always a bigger fish.

In the very short term, you’re not going to see any major differences. Stuff like this takes time to play out, but as for a year or three years down the line, oh boy, it could get messy. With that in mind, let’s talk in more depth about the fallout of this deal, what it means for sports games, and what it means for video games as a whole.

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