*

Silver Lake, Kushner brainstormed over $55 billion EA

buyout,

sources

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Saudi's PIF becomes EA's majority shareholder, Kushner's

fund

owns 5%, source says

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Deal aligns with Saudi Vision 2030 to diversify economy

By Milana Vinn, Federico Maccioni and Zaheer Kachwala

LONDON, Sept 30(Reuters) - For years, tech-focused

buyout group Silver Lake coveted video game developer Electronic

Arts ( EA ), the power behind the popular "Battlefield" and "Madden

NFL" series.

In a brainstorming session this spring, Silver Lake investors

and U.S. President Trump's son-in-law Jared Kushner started

hammering out plans for what became the world's largest

leveraged buyout, three sources familiar with the talks said.

One of the people said the talks started between Silver Lake

co-CEO Egon Durban and Kushner.

Backed by Saudi Arabia's Public Investment Fund (PIF), the

$55 billion deal announced on Monday will enlarge Silver Lake's

games, sports and entertainment portfolio while giving the

sovereign wealth fund an asset it may want to hold on to for a

long time, the sources said. EA was first approached in the

summer, the people said.

PIF will end up as EA's majority shareholder while

Kushner's private equity fund Affinity Partners will own 5%, one

of the people said.

Given that PIF already owned almost 10% of EA before the

deal, according to LSEG data, and had gaming investments, it

made sense for Silver Lake to look at the fund as a natural

partner, the person added, noting that Kushner played an

important role in brokering it.

Kushner, a top aide to Trump during his father-in-law's

first term in the White House, founded Affinity in 2021 and has

investments from funds in Saudi Arabia, Qatar and the United

Arab Emirates. He said in Monday's announcement that he grew up

playing EA games and enjoys playing them with his children.

Durban added that EA was special and said the consortium

will invest heavily to grow the business worldwide and

accelerate innovation.

EA and a spokesperson for the consortium declined to

comment.

Saudi Crown Prince Mohammed bin Salman, who has said he enjoys

unwinding by playing video games with friends and his children,

has laid out his ambition for his country to be the "global hub

for games and esports" by 2030.

"Every year we have a 15% to 25% profit so it's really amazing

and we do not want to miss that," the Prince said in a Fox

News interview two years ago, referring to PIF's annual return

on investments in professional video game competitions called

esports, in which players or teams vie for prize money.

"This isn't just a spreadsheet deal. It's Saudi Arabia

buying time, talent, and cultural clout in one shot," said Joost

van Dreunen, games professor at New York University's Stern

School of Business.

"It puts a trophy IP house at the tip of the Saudi Vision

2030 spear, backed by a government that has earmarked $38

billion for games and sees interactive entertainment as both

soft power and long-run monetization."

As part of that goal, the almost $1 trillion Public

Investment Fund has made major outlays in video game publishers

in recent years through its Savvy Games Group.

The investments, including a stake in "Call of Duty" maker

Activision Blizzard and holdings of about 4% in Nintendo and

about 6% in Take-Two Interactive, are part of the kingdom's

Saudi Vision 2030 plan to diversify away from oil by pouring

billions into other sectors.

EA's well-known franchises and brands, as well as the chance for

PIF to bring game-developing capabilities to the kingdom, helped

convince the fund to double down on its investment, one of the

people said.

Saudi's esports foundation has announced a new tournament

for national teams next year, with EA as a partner. Qiddiya, one

of PIF's infrastructure giga-projects in Riyadh, Saudi Arabia,

aims to attract 10 million visitors per year to its esports and

gaming district by 2030, the wealth fund said this year. Branded

as the 'city of play', Qiddiya is focused on entertainment and

tourism, with the goal of incubating 30 leading video game

development companies.

The consortium is investing $36 billion in the EA buyout,

including PIF's existing stake, supported by $20 billion in debt

financed by JPMorgan, EA said Monday.

The financing was possible due to a dearth of deals for

investors in leveraged loans, as private equity firms have

largely stayed on the sidelines in recent years, one of the

sources and a fourth person with knowledge of the deal said.

EA shareholders will receive $210 per share in cash, a 25%

premium over the stock's closing price on September 25 before

reports of a deal emerged.

Some analysts consider that as too little. "The true earnings

power of EA is only beginning to emerge," Benchmark analysts

said. EA stock was trading near all-time highs, according to

LSEG data.

While the merger agreement allows 45 days for a superior bid to

emerge, Van Dreunen saw that as unlikely to happen. "Matching it

would require deep pockets and a high tolerance for scrutiny. A

strategic bidder would face antitrust and cultural blowback,

while private equity would struggle to pencil the leverage," he

said.

The deal will require regulatory approvals but is unlikely

to face headwinds, some analysts said. "Given today's broadly

constructive Western-Saudi ties, the consortium is more likely

to face "box-ticking" reviews and a few raised eyebrows than

outright resistance, as implied by the Q2 2026 expected closing

date," said David O'Hara, of MKP advisors in a note published on

Monday.