This morning’s announcement that EA plans to sell itself to a consortium of private equity firms is one of the biggest business stories of the year. The $55 billion deal is the largest leveraged buyout in history and will send ripples through the world of high finance, both within and outside the gaming sector.
But even players who have no interest in the business side of the game industry should be paying attention to the news. Analysts who spoke to Ars Technica said that the privately owned version of Electronic Arts will likely be very different from the old public company, in ways that could directly affect the kinds of games the mega-publisher produces.
A $20 billion hole to fill
One of the biggest differences between a publicly owned EA and a privately owned version is that the latter will be saddled with roughly $20 billion of fresh debt provided by JP MorganChase, which is being used to help finance the leveraged buyout. Wedbush Morgan analyst Michael Pachter estimates the firm will be on the hook for roughly $1 billion a year in service payments on that debt after the deal closes.