EA’s $55 Billion Going-Private Deal Faces Skepticism from Wall Street on Timing

TradingKey - Recently, video game giant Electronic Arts (EA) announced plans to go private at a valuation of approximately $55 billion. The news continued to lift the stock, with EA shares rising another 4.5% on Monday (U.S. Eastern Time).

[Source: TradingKey]

The deal is being funded by a consortium including Saudi Arabia’s Public Investment Fund (PIF), private equity firm Silver Lake, and Affinity Partners, led by Jared Kushner.

If completed, the transaction would become the largest leveraged buyout in global history, surpassing the previous record of $32 billion for Texas utility company TXU in 2007.

Earlier this year, player engagement for EA Sports FC, the company’s flagship football game franchise, experienced a noticeable dip. After EA disclosed this trend, its stock plunged by its largest single-day percentage drop in nearly 17 years. While EA also owns major franchises like The Sims and Madden NFL, its performance has been uneven in recent years, and its stock has underperformed the broader market over the long term.

However, investor sentiment has improved significantly from年初lows, driven by strong anticipation for the upcoming release of Battlefield 6.

In fact, optimism around Battlefield 6 has grown so intense that some analysts are questioning why EA would accept a buyout offer now.

“We can certainly understand why EA’s management and board might want to monetize the company’s value,” Doug Creutz of TD Cowen wrote in a note to clients over the weekend, before the deal’s formal announcement. “What makes less sense is why they would want to do it at this time and at this price.” He suggested investors should hold out for a $60 billion valuation.

The Wall Street Journal noted that betting on sustained success from a single game — even one as anticipated as Battlefield 6 — after accepting a near-certain acquisition offer amounts to a high-risk gamble for market participants.