A consortium of investors led by Saudi Arabia's sovereign wealth fund PIF and Silver Lake is ready to acquire Electronic Arts for $55 billion in a leveraged buyout expected by 2027. However, experts doubt the financial feasibility of the deal and its timing.
The investment group Affinity Partners is also involved in the deal. The agreement provides for the buyout of all EA shares, and according to institutions such as Citigroup, the timing is a bit strange.
In an interview with Yahoo Finance, Citigroup Managing Director Jason Bazinet noted:
"The irony is that the market will soon see Battlefield 6 sales figures. If orders are high, buyers will demand a premium. The question arises: why make an offer right now? Perhaps it would have been smarter to do it six months ago, when the Battlefield 6 data was unknown."
The deal adds $20 billion of debt to EA through a potentially high-interest Single B loan. According to Bazinet's calculations, the internal rate of return (IRR) on the project is low:
"If you use consensus forecasts, the IRR will be in the low to mid single digits. From a financial point of view, this is not the most rational move. Perhaps the Saudis have strategic motives, but the deal raises economic questions."
