Electronic Arts Inc. Bonds experienced a significant sell-off Tuesday following the announcement of a buyback offer linked to U.S. Treasury performance by the investor group poised to seize the video game maker private, according to Trace data.
The bond due in 2051 fell 13.75 cents on the dollar to 78.25 cents, while a bond maturing in 2031 dropped 4.7 cents to 92 cents, reaching their lowest levels since the initial buyout announcement in late September. The buyback offer, impacting $1.5 billion in notes, has introduced an unusual mechanism tying the debt’s value to Treasury yields.
The acquisition, valued at roughly $55 billion, will observe Electronic Arts taken private by a consortium led by Silver Lake, Affinity Partners and Saudi Arabia’s Public Investment Fund (PIF). The deal is backed by a $20 billion debt financing commitment from JPMorgan Chase, with $18 billion expected to be funded upon completion of the transaction.
The leveraged buyout structure, which relies heavily on debt, marks a return to a strategy that was largely out of favor for more than a decade. The scale of the debt involved in the Electronic Arts deal—$20 billion—is substantial, reflecting a renewed appetite for large-scale leveraged transactions in the current financial environment.
The all-cash deal is expected to deliver a significant return to Electronic Arts investors, but also introduces uncertainty regarding the future direction of the company and its popular gaming franchises. The transaction is currently awaiting regulatory approvals and is expected to close later this year.
