$55 billion EA deal a 'head scratcher' for Saudis, Citigroup manager Jason Bazinet says

Saudis' bid to take Electronic Arts private doesn't make a ton of sense strategically, Cito'This isn't the most compelling use of capital.

$55 billion EA deal a 'head scratcher' for Saudis, Citigroup manager Jason Bazinet says
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Senior Gaming Editor
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TL;DR: A $55 billion consortium, including Saudi Arabia's PIF and Silver Lake, is taking Electronic Arts private in a leveraged buyout expected by 2027. Experts question the timing and financial sense, citing low projected returns and $20 billion debt, despite upcoming Battlefield 6 sales data that could justify a higher valuation.

A consortium of investors is taking Electronic Arts private in a $55 billion leveraged buyout, but experts are saying that the deal's timing doesn't make a ton of financial sense.

$55 billion EA deal a 'head scratcher' for Saudis, Citigroup manager Jason Bazinet says 2
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EA will soon become a private company. A consortium of three investor groups has pooled $55 billion together to buy out all existing EA shares: Saudi Arabia's PIF sovereign wealth fund, investment firm Silver Lake, and Jared Kushner's investment group Affinity Partners. The deal, which is expected to close in April 2027, is a bit of a head-scratcher for institutions like Citigroup.

In a recent interview with Yahoo Finance, Citi managing director Jason Bazinet says the timing of this move is unusual, mainly because EA will likely divulge metrics of Battlefield 6 during its upcoming quarterly reports and that info can potentially be used to secure a higher price.

"But the irony of the timing of this bid is...The Street's going to get a look at how many Battlefield 6 units come out. And if those orders fly off the shelf days from now, the buy side's going to demand a higher premium. So you sort of scratch your head and say like, 'why did you put this offer in now? Could you have done it six months ago when we would have never known what Battlefield 6 was?'

"You know, maybe that would have been smarter. It's just very strange timing."

The deal also saddles EA with $20 billion in debt via a potentially high-interest Single B loan.

Bazinet goes on to say that the internal rate of return (IRR) on this deal isn't extraordinary or captivating, at least based on the projections:

"When we ran our IRRs for the money that was deployed here, if you use the consensus numbers, which weren't crazy, it spit back something like a low to mid single digit IRR.

"This just doesn't strike me as the most compelling use of capital. If they had gone and made an offer for EA earlier this year when they stubbed their toe on FC, and the stock was $125 a share, and the buy side was very angst-ridden about the future of EA and the durability of FC, that you could understand.

"But things were going quite well for EA, so I just don't see a super compelling IRR.

"Maybe there's strategic reasons that the Saudis have for why they want to buy this asset but but on the financial merits, it's a head scratcher."