Electronic Arts sees a record buyout deal. But should shareholders be happy?

By James Rogers

Electronic Arts' stock surges after the company agreed to be acquired for $55 billion by a group of investors that includes Jared Kushner's Affinity Partners

Videogame maker Electronic Arts is being acquired by an investor consortium in a $55 billion deal

Videogame maker Electronic Arts Inc. confirmed Monday that it will be acquired by Saudi Arabia's PIF sovereign-wealth fund, private-equity firm Silver Lake and Jared Kushner's Affinity Partners in a $55 billion deal, which would be the largest-ever leveraged buyout.

The record merger, according to Dow Jones Market Data, marks another videogame-industry megadeal after Take-Two Interactive Software Inc.'s (TTWO) $12.7 billion purchase of Zynga Inc. and Microsoft Corp.'s (MSFT) $69 billion purchase of Activision Blizzard Inc.

There is some question among Wall Street analysts over whether the deal actually makes sense for Electronic Arts (EA) shareholders, given that it comes just before the release of the latest version of its popular "Battlefield" videogame.

As Benchmark analyst Mike Hickey put it, the decision by the company's management to pursue a sale represents "a critical error," as it effectively removes the ability of shareholders to participate in any potential upside from the "Battlefield" release.

Still, the stock surged 4.5% into record territory Monday, after soaring 14.9% on Friday following a Wall Street Journal report that a deal was in the works. The good news for investors was that the actual amount of the deal at $55 billion was more than expected, as the WSJ report said it would be "roughly $50 billion."

As part of the deal, PIF will roll over its existing 9.9% stake in the Redwood City, Calif.-based company. Electronic Arts shareholders will receive $210 per share in cash, which represents a 25% premium to the company's share price at market close on Sept. 25, which was before the WSJ report.

The deal includes $36 billion in equity financing and $20 billion in debt financing, with the full debt amount solely committed by JPMorgan Chase Bank.

The transaction is expected to close in the first quarter of fiscal year 2027.

Meanwhile, Benchmark's Hickey believes the deal also undervalues Electronic Arts, as he had a $250 price target on the stock. But keep in mind that Hickey was the most bullish on the stock, of the 29 analysts surveyed by FactSet who cover the company. The per-share price of the deal was 14.4% above the average analyst price target of $183.61.

Electronic Arts shares have now run up 38.5% this year, while the S&P 500 index SPX has advanced 13.2%.

-James Rogers

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09-29-25 1830ET