Electronic Arts Is Going Private. Is It Too Late to Buy EA Stock Here?

Core Viewpoint - Electronic Arts (EA) is undergoing a significant transformation with a $55 billion leveraged buyout led by the Saudi Arabia Public Investment Fund, marking a historic moment in the gaming industry [1][3]. Transaction Details - The buyout will see EA acquired at $210 per share, representing a 25% premium over its closing price of approximately $168 on September 25 [2][3]. - The deal comprises about $36 billion in equity investment and $20 billion in debt financing from JPMorgan Chase, making it the largest leveraged buyout in history [3]. Strategic Implications - Under private ownership, EA will gain flexibility to pursue long-term strategic initiatives without the pressures of quarterly earnings reports and public market scrutiny [3]. - EA's strong sports gaming portfolio and live services revenue, which now accounts for nearly 75% of net bookings, provides a stable foundation for future growth [4]. Regulatory Considerations - The size of the deal and the involvement of foreign investors may attract extended regulatory scrutiny, potentially complicating the path to closure expected in Q1 of fiscal 2027 [4]. Market Reaction - EA's shares have increased by over 21% since rumors of the deal emerged, trading close to the takeout price of $210 [5]. - Analysts express concerns that the offer may not fully reflect EA's potential, especially with upcoming game releases, while the lengthy closing timeline and regulatory hurdles present significant risks [5]. Shareholder Perspective - For existing shareholders, accepting the certain 25% premium appears prudent rather than speculating on a higher competing bid, particularly in light of the firm's recent growth challenges [6]. - Wall Street's consensus rating on EA shares is "Moderate Buy," with a mean target of about $174, indicating potential downside of approximately 12% from current levels [7].