Quoted from the VGC article by Andy Robinson
Saudi Arabia’s Public Investment Fund will own 93.4% of the Battlefield publisher, if it clears government scrutiny
Electronic Arts’ proposed sale to Saudi Arabia’s Public Investment Fund has been approved by the company’s shareholders.
The $55 billion takeover deal was approved in a shareholder vote on Monday. The takeover will now require approval from government regulators to be finalised.
Should the acquisition be approved, Saudi Arabia’s Public Investment Fund will own 93.4% of the EA Sports, Battlefield, and Sims publisher. Silver Lake Partners – an investment fund run by a US private equity firm– will own 5.5% of shares.
The financial details of the deal are as follows:
$36B in equity
$20B in debt
A 25% premium for shareholders, and I think that is the important factoid, it’s a thing we need to look at and consider when the details of the Netflix, Warner Bros, Paramount love triangle come up, what is that premium being offered to shareholders in both offerer deals, if any.
But specific to this deal, David Rae wrote about this two months ago, echoing some of the same sentiments that I’ve voiced in the intervening months. Rae is currently the CFO and COO at Lussa, a next-gen game development platform & engine, specifically focusing on tools enable implementation of procedural generation, intelligent debugging, and natural language design
That what I would expect us to see is a tilt in what comes out of the greenlighting process, which is the means by which the gaming industry traditionally exercises governance by financial and P&L leadership over the creative process and project execution. What MUST happen, by defn when this deal goes down is that that $20bn debt, which I believe will be owed to JP Morgan, MUST be repaid, and with the terms and conditions that are agreed to by Silver Lake, the Saudi Arabian PIF, and Silver Lake.
And on that note, I believe that this is also the assurance that will be offered to the FTC and any regulatory oversight, when we talk about the concerns that have been raised by congress on the control of an American media company by a foreign entity. That with JP Morgan involved, there should be little concern b/c should a default occur or other legal action need to be taken, those assets would revert to JP Morgan Finance qnd then they would preside over disposition of those assets and IP to other, I am sure at that point, American corporations.
At any rate, I feel pretty sure that what we won’t see is another Sea of Solitude, Lost in Random, Unravel, and maybe not even a Kingdoms of Amalur or game from Hazelight Studio. In past history, EA has had things like the EA Partners Program, EA Originals, and EA Creator Network initiatives that have provided investment capital to back studios that made a successful pitch to the board to get financial and publishing backing for their title, which could include marketing and other support.
And to me that is part of where the “is this good or bad for the industry” really needs to come down on. For a few years now, there has been discussion coming out of the post-pandemic GDC, what will now be called the GDC Festival of Gaming, about how the landscape of financing game development has radically changed. And i think that conversation is significantly more important than the “down with exclusives, your games need to be on every platform” thesis. We need to take a good hard look at how game development gets financed in a time when much of the venture capital / investment equity firm backing has been eroded from traditional finance pipelining. And then IRT this deal specifically, what it will mean when yet another potential financier is taken off the table.
Rounding Off Infinity 