EA Faces Layoff Concerns After $55 Billion Take-Private Deal Closes
The completion of the take-private deal shifts EA from public to private ownership while loading it with debt that its own EBITDA may not comfortably cover, making cost reductions and likely layoffs a near-term reality.
Reporting from 1 source: Automaton.
Electronic Arts completed its acquisition by a consortium led by Saudi Arabia's Public Investment Fund, Silver Lake, and Affinity Partners on August 4. The deal leaves EA with $18 billion in debt and roughly $1.8 billion in annual interest payments. Bloomberg's Jason Schreier reports the company plans up to $700 million in yearly cost cuts, including $170 million from organizational efficiencies, which he says points to large-scale layoffs.
Electronic Arts is now a private company. The acquisition by a consortium of the Public Investment Fund, Silver Lake, and Affinity Partners closed on August 4, ending 36 years of NASDAQ trading. Shareholders receive $210 per share in cash.
The buyout carries heavy debt. EA borrowed $18 billion from JPMorgan Chase, requiring about $1.8 billion in interest each year. Bloomberg's Jason Schreier notes EA's annual EBITDA sits near $1.5 billion, which covers the interest but leaves little room for error.
To manage the burden, EA told bond investors it plans cost cuts and profit improvements of up to $700 million per year. Of that, $170 million would come from organizational efficiencies, which Schreier interprets as large-scale layoffs. The company has not confirmed specific job cuts.
Synthesized by Yomimono from the 1 cited source below, including Japanese-language reporting where cited, then editorially reviewed before publishing.