Saudi Arabia’s Public Investment Fund has cleared another level in its proposed acquisition of Electronic Arts after securing European Commission approval for the record-breaking takeover.
The European Commission has given the nod to Saudi Arabia’s Public Investment Fund (PIF)’s proposed $55 billion acquisition of video game publisher Electronic Arts, removing one of the principal regulatory hurdles facing what would be the largest leveraged buyout in history. The clearance, announced on Thursday (23 July), followed a Phase I review under the EU Merger Regulation, with the Commission finding little to trouble it from a competition perspective.
The acquisition will see the Public Investment Fund, Saudi Arabia’s sovereign wealth fund, acquire sole control of California-based Electronic Arts, whose portfolio includes some of the world’s best-known video game franchises, including EA Sports FC, Battlefield, The Sims, Apex Legends, Dragon Age and Mass Effect. The deal, announced in September last year, is being led by PIF alongside US private equity firm Silver Lake and Affinity Partners, the investment firm founded by President Trump’s son-in-law Jared Kushner. It also comes as the Trump administration seeks closer economic ties with Saudi Arabia, including cooperation on civil nuclear technology.
Founded in 1982 and headquartered in Redwood City, California, Electronic Arts has grown into one of the world’s largest video game publishers, employing thousands of staff and generating billions of dollars in annual revenue. Its annual sports titles dominate football, American football and Formula One gaming, while franchises such as The Sims and Battlefield rank among the industry’s most commercially successful series.
The hefty $55 billion price tag may catch the eye, but from Brussels’ perspective this was a relatively uncomplicated deal, with the Commission determining that “the notified transaction would not raise competition concerns, given the companies’ limited market positions resulting from the proposed transaction”. In other words, there was too little overlap between the parties’ activities for the deal to threaten competition.
Despite getting the nod under the EU Merger Regulation, the acquisition still has a few regulatory levels to complete before it can go through. The European Commission is also examining the transaction under the EU’s Foreign Subsidies Regulation (FSR), which gives Brussels powers to investigate whether financial support from non-EU governments has distorted competition in the internal market. However, that hurdle is expected to be cleared successfully this week. The deal must also complete regulatory reviews in the United States, where scrutiny is expected to focus on foreign investment and national security issues rather than conventional competition concerns.
The acquisition is the latest step in Saudi Arabia’s push to become a major force in gaming and digital entertainment as it seeks to diversify its economy beyond oil under its Vision 2030 programme. Through PIF and its subsidiary Savvy Games Group, the kingdom has spent billions acquiring developers and esports businesses while also building sizeable stakes in publishers including Nintendo and Take-Two Interactive.
The takeover has attracted political attention because it would extend Saudi Arabia’s growing investments in global sport and entertainment into the video games industry. Critics have characterised the kingdom’s ownership of assets including Newcastle United, LIV Golf and major boxing events as part of a wider ‘sportswashing’ strategy, arguing that investment in high-profile sporting and entertainment brands helps burnish Saudi Arabia’s international image. Saudi Arabia rejects that characterisation, saying the investments form part of its Vision 2030 strategy to diversify the economy beyond oil.
If the remaining approvals are secured, the acquisition will complete the largest leveraged buyout ever undertaken, further cementing Saudi Arabia’s growing influence over the global video games industry.
Electronic Arts is being advised by Wachtell, Lipton, Rosen & Katz, while Kirkland & Ellis is leading the legal team for the acquiring consortium. Silver Lake has instructed Latham & Watkins and Simpson Thacher & Bartlett, with Sidley Austin advising Affinity Partners.
