The Saudi-led consortium has completed the purchase of Electronic Arts.
The owner of EA FC, The Sims, and Battlefield now belongs to Riyadh.
But why did they sell off American stock to buy "video games"?
The strategy behind this check is much bigger than it seems!
2️⃣ Deal Structure: 93% in Saudi hands
The final division of capital was as follows:
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PIF (93.4%): This is the "vault" where the kingdom keeps its oil profits. They control the business.
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Silver Lake (5.5%): A global Private Equity giant focused on technology (investor in Twitter and Airbnb).
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Affinity Partners (1.1%): The investment firm of Jared Kushner, Donald Trump's son-in-law.
3️⃣ The Strategy: Why buy EA?
The plan is Vision 2030: to remove the Saudi economy's dependence on oil. And games are their "new oil" for two reasons:
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Recurring Cash Flow: Oil prices fluctuate. Ultimate Team microtransactions generate billions of dollars every year, come rain or shine.
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Soft Power: They want to own pop culture, not just consume it.
4️⃣ Financial Engineering (The Check)
The bill is hefty. The total enterprise value has been capped at US$55 billion.
The consortium will inject US$36.4 billion in equity and take on US$20 billion in debt.
Since PIF already owned a stake in EA, they need to disburse approximately US$29 billion of "new money" upfront.
5️⃣ Burning Wall Street to Buy Games
The money comes from a portfolio rotation. In November, PIF sold positions in dozens of US-listed companies (blue chips) to raise cash.
The thesis has changed: out with the scattered passive investments in the stock market, in with total control of strategic entertainment assets.
6️⃣ What did they take? (The Cash Machine)
By buying EA, Saudi Arabia guarantees recurring cash flow in dollars, mainly through:
• Soccer: The former FIFA franchise (now EA FC).
• American Football: Madden NFL.
• Simulation: The Sims.
These are products that generate billions in revenue regardless of oil price fluctuations.
7️⃣ The Risk: Deficit vs. Solvency
The Saudi deficit is expected to double to 5.3% of GDP this year due to spending on pharaonic projects (Neom).
However, the kingdom still has very low debt compared to any G7 country and hundreds of billions in reserves.
The "squeeze" is on cash flow for these gigantic projects, not on solvency.
8️⃣ Geopolitics: The Kushner Factor
The presence of Affinity Partners in the consortium is drawing market attention. The firm is led by Jared Kushner, Donald Trump's son-in-law.
The participation, albeit a minority stake (1.1%), places the family of the US president-elect at the table in one of the biggest deals of the year, further strengthening ties between Washington and Riyadh.