Electronic Arts Valued at $55 Billion in Record LBO

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Watch Electronic Arts Valued at $55 Billion in Record LBO - Bloomberg on Dailymotion

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00:00Let's turn back to our top story this morning.

00:02The EA deal, the biggest leveraged buyout on record.

00:06Let's discuss it with Bloomberg Tech co-host Caroline Hyde.

00:09Caroline, it's punchy, $55 billion for Video Game Maker.

00:13And not even got Battlefield 6 out yet.

00:15This is what they're betting on, future success.

00:17Look, this is a company that is all about IP.

00:20This is certainly what the CEO is trying to tell its workforce already.

00:22He's sent out a note to employees.

00:24But this is about their strength, not only in shooter games,

00:27such as Battlefield 6, that comes out October the 10th,

00:30but also the sports dynasty, really, that they're showing.

00:33The fact that they're really into soccer, but also NHL and the like.

00:36This is able to withstand perhaps some of the macro headwinds,

00:39some of the offset that, you know, everyone's turned to free-to-play games.

00:42Everyone's on Roblox, everyone's using Fortnite.

00:44How have these studios been able to withstand that?

00:47This leveraged buyout comes at an idea that Silver Lake,

00:51but closely focused on some of the PIF funds, the Saudi money,

00:54they are experienced when it comes to gaming.

00:58They understand when it's necessary.

00:59And basically, this is a company that wants to come out of the eye of the storm

01:02when it comes to quarterly reporting and just get down

01:04and start being a bit more creative, a little bit more innovative

01:06without having to report on a quarterly number.

01:08But the numbers are eye-popping.

01:10If you're thinking about this from versus EBITDA,

01:13this premium is huge in comparison to, say,

01:15what an Activision was bought for by Microsoft.

01:18I never thought being a fan of first-person shooters would make me feel old, right?

01:23But I guess the kids aren't really into that anymore.

01:26All right, so what do we know about the details?

01:28Who's behind this LBO?

01:29Which banks are financing it?

01:31Danny already gave us a share price, I think $210 a piece, right?

01:34Exactly.

01:35And maybe there could be others that would come into play.

01:38Maybe I'm feeling if Battlefield 6 does end up being a roaring success,

01:41you could have some competing offers here.

01:42But clearly, the board has recommended this particular offer, $210 per share.

01:46As we know, Silver Lake Management, which we keep talking about at the moment

01:48because they're obviously one of the players within TikTok,

01:50they're looking to be involved, as is Saudi Arabia's, as I mentioned, public investment fund.

01:55Interestingly, of course, Jared Kushner's Affinity Partners,

01:58which has also got money from the Middle East,

02:00he's looking to be a player, of course, close relationship with the president.

02:04So maybe that eases some of any regulatory concerns

02:06that might be coming to play with foreign ownership.

02:08But then you've also got the idea that JP Morgan's going to be here,

02:11helping with the facility in terms of the debt load here.

02:14And this is going to be an enormous amount of debt that they're going to be taking on.

02:16But this is one that people are desperate to get in on.

02:19You know, just think about Oracle's bond sale at the moment.

02:21People want to be able to buy in on these sorts of debt mounds.

02:25We're seeing about this LBO more broadly that this is a willingness

02:28to get in to yield more and different types of asset classes.

02:32So I think JP Morgan's the main bank behind this.

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