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Silver Lake is back. With its $13 billion Endeavor deal now firmly closed, the private-equity firm has recaptured its knack for popping up in interesting times. It’s helping to take Electronic Arts private in a blockbuster (if not quite record-setting) deal and is part of the investor group seeking control of TikTok. This spring, it bought control of an Intel unit for $9 billion, giving it an early seat at the table to one of the most fascinating corporate dramas of the year. The last time the firm was this busy, it was the early, chaotic days of the pandemic, when its rescues of Expedia and Airbnb spawned a flurry of bold-bet profiles. Both deals turned out to be big winners.
Saudi Arabia’s sovereign wealth fund, PIF, will own most of EA, CNBC reported, but it will count on Silver Lake’s operators to make the most out of a storied firm behind FIFA, Battlefield, and Need for Speed. It isn’t just the firm’s tech chops; Silver Lake has bet big on sports, and two of EA’s biggest franchises are Madden and EA Sports FC, the successor to FIFA.
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Another note on EA: The takeover is getting some historic billing, but let’s check the numbers. It’s being called the largest all-cash buyout in history, with an equity check of $36 billion and $12 billion of assumed debt. The 2007 buyout of Texas utility TXU (which, it bears remembering, ended badly) included an equity investment of $36 billion and $13 billion of assumed debt, in all worth about $70 billion today. Taking out the 10% stake that PIF is rolling over into EA, and the new equity coming into this deal looks smaller still.
The $20 billion check JPMorgan is writing to cover the debt portion of the deal has similarly been called the largest single-bank deal financing ever. But JPMorgan has written checks that big before — for AT&T twice, as far back as 2011, AbbVie-Shire in 2014, and for Actavis-Allergan a year later — and Barclays and Goldman Sachs each joined the $20 billion-club in 2017. Accounting for both inflation and the size of those banks’ balance sheets at the time, all those checks would be significantly larger.
The EA deal is big and fascinating, touching as it does on geopolitics, tech, and the extended Trump family — but not quite as historic as it looks.