Electronic Arts (EA) surged more than 15% on Friday, hitting an all-time high of $197.33, after The Wall Street Journal reported that the video game giant may be going private in a massive $50 billion deal. If completed, the transaction could become one of the largest leveraged buyouts (LBOs) in history.
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According to sources, potential buyers include private equity firm Silver Lake and Saudi Arabia’s Public Investment Fund (PIF). The deal could be finalized as early as next week, WSJ reported.
This takeover comes as EA is making major moves in its game portfolio. It launched “College Football 26” in July to capitalize on the previous edition’s success as one of 2024’s best-selling titles.
Also, the company recently disclosed the first trailer for “Battlefield 6.” EA is placing a major bet on this title to bring the franchise back after the last one disappointed fans.
At its current share price, EA’s market cap is around $48 billion, suggesting the potential buyout would come at a premium. The news also lifted shares of rival Take-Two Interactive (TTWO), which jumped over 5%.
Rising Trend of Companies Going Private
The trend of companies going private is gaining momentum, especially in tech, media, and healthcare. Rising regulatory scrutiny, market volatility, and the pressure of quarterly earnings have pushed firms to seek the flexibility of private ownership.
Private equity firms and sovereign wealth funds are loaded with capital, making multi-billion-dollar buyouts more common.
For instance, Walgreens Boots Alliance (WBA) went private on August 28 after nearly 100 years as a public company. The private equity firm Sycamore Partners acquired WBA for about $10 billion.
Similarly, the retail chain Nordstrom was taken private this year by members of the Nordstrom family and El Puerto de Liverpool for nearly $6.25 billion.
Is Electronic Arts Stock a Buy, Sell, or Hold?
Turning to Wall Street, the analysts’ consensus rating for Electronic Arts is Moderate Buy, based on eight Buy and nine Hold ratings over the past three months. The average EA stock price target of $179 implies a potential 7.2% downside risk.
