Latest / Spoken News / A consortium led by the Public Investment Fund purchases video game publisher Electronic Arts in a leveraged buyout.

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A consortium led by the Public Investment Fund purchases video game publisher Electronic Arts in a leveraged buyout. · Spoken News

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  Speaker 1: Welcome to spoken News, where Wikipedia excerpts are read verbatim
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  by a computer. A consortium led by the Public Investment
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  Fund purchases video game publisher Electronic Arts in a leveraged buyout.
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  On September twenty ninth, twenty twenty five, a consortium of
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  investors comprising the Public Investment Fund of Saudi Arabia, the
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  private equity firm Silver Lake, and the investment firm Affinity
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  Partners announced a leveraged buyout of the American video game
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  company Electronic Arts. The deal, valued at fifty five billion
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  United States dollars, was completed following regulatory approvals on August fourth,
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  twenty twenty six. The acquisition was part of the PIF
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  strategy to diversify Saudi Arabia's economy away from oil by
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  expanding investments in the global entertainment and video game industries.
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  PIF gained ownership of several popular franchises under Electronic Arts,
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  including FIFA, Slash, EA, Sports FC, Battlefield, The SIMS, Madden NFL,
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  and Need for Speed. The buyout of Electronic Arts is
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  the largest leveraged buy out in history to date, and
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  the second largest video game merger and acquisition deal ever completed,
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  behind Microsoft's acquisition of Activision Blizzard in twenty twenty three.
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  The Public Investment Fund is the sovereign wealth fund of
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  Saudi Arabia. It is among the largest sovereign wealth funds
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  in the world, with total estimated assets of nine hundred
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  billion United States dollars. It was created in nineteen seventy
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  one for the purpose of investing funds on behalf of
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  the government of Saudi Arabia. The wealth Fund has Crown
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  Prince Mohammed bin Salman, Saudi Arabia's de facto ruler since
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  twenty fifteen, as its chairman. More than sixty percent of
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  the funds activities are within Saudi Arabia. Within Saudi Arabia,
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  the funds investments primarily go to private conglomerates owned by
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  prominent Saudi business families who have close ties to the
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  Saudi ruling family. Outside of Saudi Arabia, the fund's investments
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  into prominent foreign assets, such as Premier League football club
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  Newcastle United, have generated controversy due to the funds lack
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  of transparency and close control by the Saudi government, which
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  has itself faced significant criticism around the lack of human
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  rights in the country. A leverage buyout is the acquisition
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  of a company using a significant proportion of borrowed money
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  to fund the acquisition, with the remainder of the purchase
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  price funded with private equity. The assets of the acquired
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  company are often used as collateral for the financing, along
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  with any equity contributed by the acquirer. While corporate acquisitions
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  often employ leverage to finance the purchase of the target,
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  the term leveraged buyout is typically only employed when the
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  acquirer is a financial sponsor. The use of debt, which
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  normally has a lower cost of capital than equity, serves
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  to reduce the overall cost of financing for the acquisition
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  and enhance returns for the private equity investor. The equity
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  investor can increase their projected returns by employing more leverage,
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  creating incentives to maximize the proportion of debt relative to equity,
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  while the lenders have an incentive to limit the amount
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  of leverage they will provide. In certain cases, the acquired
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  company may be overleveraged, meaning that the amount of leverage
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  assumed by the target company was too high for the
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  cash flows generated by the company to service the debt.
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  As a result, the increased use of leverage increases the
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  risk of default should the company perform poorly after the buyout.
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  Since the early two thousands, the debt to equity ratio
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  in leverage buyouts has declined significantly, resulting in increased focus
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  on operational improvements and follow on m and A activity
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  to generate attractive returns. Electronic Arts, Inc. Is an American
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  video game company headquartered in Redwood City, California. Founded in
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  May nineteen eighty two by former Apple employee Trip Hawkins.
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  The company was a pioneer of the early home computer
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  game industry and promoted the designers and programmers responsible for
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  its games as software artists. EA published numerous games and
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  some productivity software for personal computers, all of which were
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  developed by external individuals or groups. Until nineteen eighty sevens
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  Skate or Die, the company shifted toward internal game studio,
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  often through acquisitions such as Distinctive Software, becoming EA Canada
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  in nineteen ninety one. That's it for now. See the
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  episode notes for sources and licensing. Thank you