SCOTT DETROW, HOST:
Earlier today, the video game company Electronic Arts confirmed plans for a historic deal. The publicly traded company has agreed to be acquired and taken private in a deal valued at $55 billion. Now, EA is a titan in the video game industry, known for wildly popular game franchises like the football game, "Madden" and the war game, "Battlefield." The buyers in this deal include Saudi Arabia's Sovereign Wealth Fund, PIF, as well as a private equity firm managed by Jared Kushner. Now, if U.S. regulators approve the deal, it could be the largest leveraged buyout of a publicly traded company ever. Jennifer Maas is a senior business writer at Variety and covers video games. She joins us now to talk about this. Welcome to ALL THINGS CONSIDERED.
JENNIFER MAAS: Thanks for having me.
DETROW: So EA's now announced this. What else do we know about this deal?
MAAS: So at the moment, we know that they are targeting to have this closed by June 2026. But ultimately, we are looking at whether or not it will get approved - is next - and then how it affects the overall gaming industry if and when it does get approved.
DETROW: I mentioned this could be the biggest buyout of a publicly traded company ever. What is the significance to you? What does this say about how video games are valued as entertainment?
MAAS: Video games, traditionally, I would say, have been undervalued as entertainment. And this is just bringing up where they truly are in the world, where they truly are in entertainment, giving them the respect that they deserve. The amount here is valid. What I will say on that, though, is also, you know, we're looking at something where just a couple of years ago probably could have been a little more. It's not that the gaming industry is worth less now. It's just that it had a giant boom for a period, and part of the reason this deal is happening at all is because growth has slowed, and we're looking for other ways, you know, within the market. What can be done? What do you do? And one of the options here was a private buyout.
DETROW: Yeah, that's the one thing I was trying to make sense of, 'cause like you said, there was this enormous, enormous boom around and after the pandemic. Then you see a slowdown. EA had layoffs, among other things. And yet, there's this massive valuation. Do those things both track at the same time to you, or are you feeling some tension in terms of how much it's valued at versus the state of the company right now?
MAAS: I think it's definitely valued correctly. I think this is, again, something that, you know, we've talked about a lot throughout the gaming industry over the past couple of years. It's one thing that confuses a lot of people when they see layoffs happening and then companies spending more money and companies doing this. The companies have the money. These companies are huge. They're worth a lot, and that value hasn't gone away. It's a lot of overproduction during the pandemic, a lot of optimism about people being at home and playing games forever and then coming back down to reality. So a lot of those were just decisions made where they grew more than was organic. And that is how you're having giant layoffs happen at the same time as you see the valuation of this company.
DETROW: What should we know about the buyers?
MAAS: So the buyers here are Silver Lake, a well-known private equity firm. Then we have Jared Kushner's Affinity Partners. And then we have the Saudi Arabia investment fund, which, I want to note, also, already had a stake in EA in the first place.
DETROW: Though we both mentioned that this needs to be approved by regulators, do you see any hurdles? What are the biggest questions going to be?
MAAS: I think right now, it's really difficult to make any predictions about what will be approved and won't be approved just based on current deals. But in this particular case, there are two things to think about - one being, obviously, Jared Kushner is involved in this. Jared Kushner has a direct tie to the current presidential administration. And then the Saudi factor here - that complicates things a little bit because there are more questions about what that means, who feels comfortable with that and why. And that depends on administration to administration. And so Saudi Arabia is very gung-ho on gaming. They see it as a great way of connecting further with youth, with American youth, and in finding further ways to monetize that relationship.
DETROW: That's Jennifer Maas, who covers TV and video games for Variety. Thanks so much.
MAAS: Thanks for having me. Transcript provided by NPR, Copyright NPR.
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