The largest leveraged buyout in history?

Summary

Unhedged Podcast Summary

Episode: The largest leveraged buyout in history?
Date: September 30, 2025
Host: Rob Armstrong
Guests: James Fontanella-Khan (U.S. Finance Editor, FT), Oliver “Bad news” Barnes (U.S. Deals Correspondent, FT)

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Episode Overview

This episode delves into what could be the largest leveraged buyout (LBO) in history: Electronic Arts (EA) being acquired for $55 billion by a powerhouse consortium. The hosts and guests break down the structure of the deal, the key players—including Saudi Arabia’s sovereign wealth fund (PIF), Silver Lake, and Jared Kushner—and what this dramatic M&A move signals for markets and the nature of U.S. dealmaking in 2025. The conversation explores the unique financing, the geopolitical context, the platform ambitions behind the buyout, and the evolving interplay between politics and finance.

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Key Discussion Points & Insights

1. Deal Structure & Key Players

• The Buyers:
  • Consortium comprised of PIF (Saudi Arabia’s sovereign wealth fund), tech-focused private equity group Silver Lake, and Jared Kushner’s Affinity investment vehicle.
  • Jared Kushner: Ex-real estate mogul, Trump’s son-in-law, invested through Affinity (funded by Saudi Arabia), served as the “sherpa” bringing parties together.
    • “Kushner, as it were, shepherding the thing.” (C, 03:14)
  • Silver Lake: Known for expertise in complex buyouts, long-standing interest in EA; described as “the best known financial engineers… best in class to get anything of this size done.” (C, 03:16)
  • PIF: Already owned 10% of EA, eager to diversify Saudi’s economy away from oil.
• Financing:
  • JP Morgan, led by Jamie Dimon, supplied $20B in debt; a significant single-bank commitment.
    • “Who do you call when you need a big check? The Sun King… Jamie Dimon.” (B, 07:19)
  • Balance off debt and equity leans more toward equity than in historic LBOs.
    • “It seemed high to me. I was struck by how high.” (B, 05:20)
    • “There's a trend unfolding… the balance of debt versus equity in these deals is tipping a bit more towards equity.” (D, 05:24)

2. Why This Deal Now?

• Equity-Rich LBOs:
  The private equity world is flushed with “dry powder” and ready to make big, concentrated equity bets.
  • “Private equity loves [cash flow].” (C, 08:25)
• Geopolitical Context:
  Saudi Arabia is aggressively diversifying, turning to tech and entertainment to move its wealth base beyond oil.
  • “The Saudis… have been aggressive buyers in… luxury hospitality, entertainment, tech.” (D, 10:19)
• Platform Building:
  Buyers likely see EA as a base to bolt on more game companies, leveraging scale and possibly integrating AI for content production and margin expansion.
  • “It's a platform, as they say in private equity.” (C, 08:46)
  • “The other name of the game is AI.” (C, 08:51)

3. The Role of Jared Kushner

• Deal Catalyst:
  Played matchmaker via unique access to both Saudi capital and U.S. business networks.
  • “It doesn't hurt when you're trying to do a huge deal… to have the president’s son-in-law on board.” (B, 12:28)
• Political Leverage:
  • His involvement may smooth approval from U.S. regulators (CFIUS), especially important for foreign takeovers of sensitive companies.
    • “It’s easier for them to sell this deal if Jared Kushner is involved.” (D, 13:17)

4. Regulatory & Political Realities

• U.S. scrutiny via CFIUS is anticipated, but the presence of Kushner and the political alliance with Saudi Arabia likely ease concerns.
  • “Saudi Arabia is… the most important ally of the United States in the Arab world.” (C, 14:24)
• Shift in political business climate:
  • Under Trump, deals with close administration ties become more visible and potentially advantageous.
    • “This version of capitalism… adjacency to the presidential administration is a crucial… component… makes me acutely as a capitalist… jumpy.” (B, 15:38)
    • “There is no deal of late… that doesn’t have a Trump angle.” (C, 16:17)

5. Risks, Comparisons, and Market Implications

• Past LBOs:
  TXU’s disastrous 2007 buyout is referenced as a cautionary tale but seen as not directly comparable due to differing strategic objectives.
  • “Which was a disaster… I saw $50 billion… it’s TXU too!” (B, 09:48)
• Saudis: Smart or Dumb Money?
  Perception persists, but the Saudis are aiming to learn and partner with “winners.”
  • “There’s a perception that it is dumb money. And the Saudis are very aware… They don’t like it at all.” (C, 10:59)
  • “They think Egan Durbin… is one of the, if not the smartest guy when it comes to complicated layered deals.” (C, 11:39)
• AI & Platform Play:
  Transformative potential for AI to “cut out a lot of the cost base” in gaming, a major driver behind the deal logic.
  • “If you can just put it through some AI… it’s cut out a lot of the cost base.” (D, 09:09)

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Notable Quotes & Memorable Moments

• On Single-Bank Financing:
  “It's a little bit like having Warren Buffett money. It's… like the Pope putting a blessing on the deal.”
  — Rob Armstrong, 07:25

• On the Motivation Behind the Deal:
  “The name of the game is scale, and the other name of the game is AI.”
  — James Fontanella-Khan, 08:51

• On Political Connections:
  “Is it quite all right to have the president’s son-in-law cash in on that status as… a matchmaker in the world of money… selling the Trump imprimatur?”
  — Rob Armstrong, 12:28

• On the Saudis’ Reputation:
  “There's a perception that it is dumb money. And I think the Saudis are very aware that they're perceived this way and they don't like it at all.”
  — James Fontanella-Khan, 10:59

• On the Role of Trump & Politics in Deals:
  “This version of capitalism… makes me acutely jumpy. I don’t like this version, but perhaps it was always like this… It’s just more visible now under the Trump administration.”
  — Rob Armstrong, 15:38

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Timestamps for Important Segments

• [01:50-04:56] – Breakdown of the deal’s structure and the backgrounds of key participants
• [05:20-06:18] – Unpacking the equity-debt split and implications for private equity industry trends
• [06:28-07:38] – How JP Morgan and Jamie Dimon entered the picture, timeline of the bidding process
• [07:41-08:46] – Financial health of EA, cash flow, and PE’s interest in the business
• [08:46-09:56] – Vision for EA as a platform and the growing importance of AI
• [09:56-12:25] – Saudi Arabia’s investment strategy, their perceived investor savvy, and choice of partners
• [12:28-14:24] – Regulatory perspectives, Kushner’s political advantage, and comparison to past foreign acquisitions
• [14:24-17:15] – Discussion of shifting political-business climates and the perennial role of power brokerage in mega-deals

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Long & Short Segment

• [18:11-19:18] –
  • Oliver Barnes: Long on a Trump-led M&A boom: “There's a world in which a lot of companies are seeing… opportunity to do big deals.”
  • James Fontanella-Khan: Short on deal-making resurgence: “There's one thing that is never good for deal making… and that's uncertainty. And Trump is the emperor, the king of uncertainty.”
  • Rob Armstrong: Long old people smoking pot, tying news of cannabis and gaming culture together lightheartedly.

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Tone and Language

• Conversational, sharp, and irreverent—typical of the Unhedged team.
• Blend of in-depth analysis and wry, insider banter.

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In Summary

The episode dissects the record-breaking $55B LBO of EA as a uniquely modern deal, shaped by a complex cast—global capital, legendary dealmakers, and politically-embedded intermediaries. The hosts underscore how shifting financial strategies, AI, and politics are redefining not just how deals are made, but who gets to make them and why. While the potential upside is transformative for all involved, risks abound, and the shadow of political influence now looms larger than ever in American deal-making.

Transcript

[A]

At pjum, we actively manage risk today while targeting outperformance tomorrow. So no matter what investment risks concern you most. From geopolitics to inflation to liquidity, PGM brings disciplined risk management expertise that spans 30 market cycles. Our active approach finds opportunities and volatility, helping our clients to navigate risk and achieve their long term goals. Pjum, our investments shape tomorrow today.

[B]

Pushkin this week we have seen what may be the largest leveraged buyout in history. The video games maker Electronic Arts has been purchased for 55 billion American dollars. Today. On the Is this deal a sign of the top or a new dawn for Wall Street? This is Unhedged, the Markets and finance podcast from the Financial Times in Pushkin. I am Rob Armstrong coming to you from an autumnal New York City, joined by the two greatest reporters in the history of finance. It's a show of superlatives. James Fontanella Khan is our U.S. finance editor here at the FT. Welcome, James.

[C]

Thanks for having me, Rob.

[B]

Oliver, Bad news Barnes is our US Deal correspondent.

[D]

US Deals. There's more than one deals and it's.

[B]

Not all bad news.

[D]

It's not all bad news. Good news for the ehl.

[B]

Right on. Okay, Oliver, on that very point, walk us through the structure of this deal. Gynagarus deal.

[D]

Yes. So on Monday morning, a consortium made up of pif, the Saudi Arabian sovereign wealth fund, Silver Lake, the technology focused private equity group, and a guy you might have heard of, Jared Kushner, President Trump's son in law.

[B]

Right.

[D]

Wrote a $55 billion check to buy electronic cards to take it off the public markets.

[B]

That's what leveraged buyout means.

[D]

Helped by JP Morgan and Jamie Dimon, who stumped up $20 billion worth of debt.

[B]

Yes. Take us through the players. What is the significance of this cast of characters?

[C]

So let's start from Jared Kushner, the son in law of President Trump, married to Ivank Trump.

[B]

And, and he's kind of the Sherpa. He's getting all the parties together.

[C]

We wrote a beautiful TikTok explaining how the deal got put together. And essentially it started about early in the year. Jared Kushner, who he's not doing this out of his own pocket. He set up after the Trump 1 administration set up an investment vehicle called Affinity, which had a mandate to invest in kind of fast growing tech focused companies.

[B]

And he got the funding for that.

[C]

Venture from Saudi Arabia.

[B]

Saudi Arabia. Okay.

[C]

And we'll get back. This is a complicated deal as a lot of buyouts are. So we're Going to take our time to explain this clearly.

[B]

Kushner, as it were, shepherding the thing.

[C]

So he met with one of the co heads of Silver Lake, who's Egan Durbin. Silver Lake had been looking at EA for a long time. They also have a reputation for being some of the smartest guys when it comes to gigantic complex buyouts especially. Absolutely. They are the best known financial engineers definitely on the West Coast. They've partnered with Michael Dell, all the great PCs. Yeah, yeah, maker. And so they are. They are known for being the best in class to get anything of this kind of size done. So Kushner, who's not a tech guy, he's obviously made most of his money in the real estate business, predominantly in New York and Jersey, went to meet Egan. He said, what do you think about this deal? And Egan said, I'm interested. And obviously the other key component, pif, the sovereign wealth fund of Saudi Arabia, was already an investor in EA. They had a 10% stake. So at that point, Kushner, who had the relationship with Saudi, which is kind of one of the main contributors to his private equity fund, he went and knocked on the door of the Saudis and said, hey, mbs, my dear friend, how about we do a deal and we buy out this company and kind of transform it, make more money together, help you diversify your country away from oil and gas, which is one of the big things that Saudi Arabia's crown prince, mbs, has been trying to do. So again, a lot of people involved.

[B]

But they managed to get the interests aligned. One thing I was struck by Oliver is, you know, with every leverage buyout, there's a discussion of the split in the deal between debt and equity. How much debt money is being put in to the $55 billion, how much equity money? And there was a lot of equity money in this deal. It seemed high to me. I was struck by how high.

[D]

Kind of like a somewhat leveraged buyer.

[B]

Yes, a moderately leveraged buyer.

[D]

A moderately leveraged buyer, yeah. I think it's a consequence of. You always hear about the private equity industry and the amount of dry powder that they have to put to work. And if you go through the FT archives, Egon Durbin sat down with our esteemed colleague Antoine Gara a couple years ago saying exactly this, that Silver Lake had the ambition to write big checks and place, you know, a few concentrated bets on companies. And that's exactly what they've done. And I think there's a trend unfolding where, you know, the balance of, of debt versus equity in These deals is tipping a bit more towards equity because they have a lot of dollars to put to work. Right. And that when you. Saudi Arabia involved, they also make the deal safer.

[B]

Right. I mean, you have more equity in there 100. You don't have that interest expense looming over you every month or every year that the company has to pull along. You know, it makes it a big.

[C]

Still, a lot can go wrong.

[D]

Yeah, but it's a short period of due diligence, though. I mean, J.P. morgan made a decision to put up the $20 billion.

[C]

I mean, within.

[D]

Within a few days.

[C]

Yeah. We're making calls yesterday frantically to find out how this deal got put together. And just so that our listeners can get a sense of the timing. Send you the first bid. After they met early in the year, Silver Lake and Kushner, the Saudis and Kushner, they then made a bid in September around Labor Day. That bid was rejected by EA's board, but they kept it quiet. And then a new bid arrived about 14 days ago, 10 days ago, which was much higher. And then they had to figure out the financing, the debt portion. And Kushner, the Saudis and Egan Durbin of Silver Lake decided we want to make one call to one bank for one check. And who do you call when you need a big check?

[B]

The Sun King, absolutely.

[C]

The banker of America, Jamie Dimon.

[B]

And him being able to put up 20 billion or being willing to put up 20 billion, it's a little bit like having Warren Buffett money. It's a little bit like the Pope putting a blessing. Putting a blessing on the deal. So that gives it a positive angle.

[C]

As Ollie was saying, not a lot of due diligence. It was done in seven days.

[B]

So let's do a little due diligence ourselves. What kind of shape is EA in? Is this a very. A strong business?

[D]

It certainly struggled a bit on the public markets. Like it's. Its share prices declined over the past few years. EA has like a rich stable of content. And I'm sure you're eagerly anticipating the launch of the new Battlefield series.

[B]

I know.

[D]

Or maybe your kids are.

[B]

Yeah.

[D]

But you know, EA lives or dies by that content and it does have a rich stable of content.

[B]

And it has the Madden game.

[D]

I know the Madden NFL games. It has EA Sports fc, which is the rebranded FIFA and the Sims, a whole bunch of stuff. So, yeah, there's the potentials there. And also it does spit off quite a lot of cash and I think.

[B]

$2 billion a year in the last.

[C]

Couple years, private equity Loves that.

[B]

Exactly. So $2 billion a year comes squirting out of this thing, which can support quite a lot of debt or more.

[D]

You know, I'm not sure the whole debt package, though, it's quite a large one.

[B]

Yeah.

[D]

And they clearly have ambitions for it. I mean, the sense that we got from the buyers is that they're now going to go and do other deals off the back of this. Right.

[C]

It's a platform, as they say in private equity.

[B]

They're going to attach other games companies to it or whatever.

[C]

The name of the game is scale and the other name of the game is AI.

[B]

Yeah. And we can get. I wanted to talk about.

[C]

Let's talk.

[B]

Let's get into it right now. This was something that came up a lot in your stories that there is an idea here that this is an industry or a company that AI is going to transform. Do you buy that idea, gentlemen?

[D]

It makes sense. Right. I mean, I'm not a video games developer. Right, right. But, you know, if you move from a model where you have to have a human being intricately designing every player on EA Sports FC and instead you can just put it through some AI and, you know, render those players, so it's cut out a lot of the cost base. Right.

[B]

It's a margin expansion story in some way.

[D]

Exactly. And I'm sure that's something that the consortium's thinking about, particularly Silver Lake, because I don't think they'd want to lose money on this. I do think we should step back from this. And I don't think this is your. Your standard lbo. I mean, everyone talked about txu. Right. Which is eclipsed in terms of value.

[B]

Yeah. Which was a disaster, by the way. This. As an old guy, this was the first thing I thought of. I saw $50 billion IPO. It's the top of the market. Oh, my God. It's TXU too, which was a big energy company. Leveraged buyout in 2007.

[D]

I was 12 at the time.

[B]

Yeah, Oliver was 12. I was a young man of 70 when that deal came out.

[C]

I was in my second year at the FT.

[B]

So.

[D]

Yeah, but I don't think this can be understood as like your conventional, like common or garden lbo. Right.

[C]

Because I think that's fair.

[D]

The Saudis, in pushing to diversify away from oil and gas, have been aggressive buyers in like the luxury hospitality space, in entertainment, in tech. They've even bought a bunch of other gaming companies and they own public equities and then a bunch of other gaming companies and you know, I don't think Piff is thinking, you know, five year vintage will flip this. That's not the equation there.

[B]

Let me ask you this, James. In their history trying to diversify their wealth, have the Saudis been the smart money or the dumb money or somewhere in between?

[C]

It's a tough one to answer straight. I mean, certainly there's a perception that it is dumb money. And I think the Saudis are very aware that they're perceived this way and they don't like it at all. Who would they feel that they have been taken for granted in many instances. And so having picked as a partner Jared Kushner and Silverlake, what they're trying to do here is to kind of get some protection and not to be treated as dummies. I don't think they've got the arrogance to say we're the smartest guy in the room. They are trying to diversify. So that's a process. And they're looking for partners. In this case, somebody like Jared is kind of an important geopolitical partner. He's been involved in peace negotiations in the Middle East. As you know, he's got a personal relationship with mbs. So that gives them cover, that they will not be taken for a ride on the politics side of things. And on the financials, they think Egan Durbin is known, again as I mentioned earlier, like as one of the, if not the smartest guy when it comes to complicated layered deals. And he's always made money or mostly made money. And so they think we want to be with a guy that if he's making money for himself, he's going to make money for us.

[B]

Yes.

[C]

Obviously it doesn't always go that way.

[B]

Yeah, you have to make sure you're on parallel footing.

[C]

Exactly.

[B]

But let's focus in on Kushner for a second. I mean, one thing that's very clear, and this came up in the ft, is that it doesn't hurt when you're trying to do a huge deal in which mostly foreign money is buying a huge American company, to have the president's son in law on board and, you know, to put it with maximum crudeness, is it quite all right to have the president's son in law cash in on that status as some as like a matchmaker in the world of money and as it were, selling the Trump imprimantur. Is that the word stamp of approval? The stamp of approval. Is this all quite right?

[D]

Well, I suppose this is the new world we live in, right, Isn't it? I mean, if you look, when Kushner fostered those relationships with Saudi, it was during the first Trump administration. And clearly that's a big part of his value to this deal. But he wasn't just, like, brought in as a foil, you know, for this deal. He conceptualized it in some way with Silver Lake. And then they said, you go to Piff and bring them in. But no, for sure. I mean, one of the themes in kind of covering deals at the moment is an adjacency or ability to barter with the current administration. And, you know, it's easier for them to sell this deal if Jared Kushner's involved than. Than not. And it's a big buyout of a U.S. company by a consortium involving a foreign buyer. So it'll be looked at by cfius, the Committee on Foreign Investment in the United States. And it's not like a big infrastructure deal or something like that. So it's probably unlikely to really flash red warning signs for cfius. But you would imagine Kushner's involvement might ease the path a little bit.

[C]

If I can interject on that, and I agree with everything Ali has just said under previous administrations, there's no doubt that a deal of this kind would have gone through meticulous scrutiny by the body that Ali mentioned, cfi, cfius, which essentially looks at all the foreign investment that is done in the US From a national security perspective. This is a video game company. It's increasingly. It's got a data component. Inevitably, yes. And so you want to make sure that this foreign buyer is not misusing the data of U.S. citizens. And it's important to underscore that Saudi Arabia is an important, if not the most important, ally of the United States in the Arab world. So it's not a hostile country. It would be a very different deal if a Chinese company was trying to buy ea. So we need to make that distinction. But we should also bear in mind that Saudi Aramco could not list in the US because there were a lot of questions about the Saudi government's involvement in 9 11. That's why the personal relationship with Jared Kushner is so vital to this deal.

[B]

I mean, you guys are reporters. I'm an opinion writer, so I can say this. This version of capitalism was where adjacency to the presidential administration is a crucial or at any rate, a very beneficial component of any large deal. This makes me acutely as a capitalist. This makes me acutely jumpy. I don't like this version of capitalism, but perhaps it was always like this, that you always needed political relationships to do deals of this nature and this size. And it's just more visible now under the Trump administration. Do you think that's possible? I don't know.

[C]

I think it's fair.

[B]

Yeah. Yeah.

[C]

With everything that Trump does is. There's a kind of a crudeness to it, but yeah, I think he would agree with that. This is how business has always been done. I'm just being more transparent and honest about it. There is no deal of late of significance that doesn't have a Trump angle. I mean, we can. From Intel US Steel.

[D]

The railroad merger.

[C]

The railroad. I mean, it's just. But it's also true that the previous administration of Joe Biden blocked a lot of deals. Like, think about the role that Lina Khan, who was the antitrust regulator at the ftc, played in shaping using deal making as a way to push certain kind of industrial policy is what it was. Or social policy or justice. Social justice. And. And correcting other wrongs in society. So we shouldn't pretend that Trump is an anomaly. I mean, politics has always played a role in business.

[B]

Listeners, we'll be right back with Long and short.

[A]

Bonds are back and so is all the credit. PGYM Fixed Incomes Month podcast series. From the latest trends to long term perspectives, you'll get timely fixed income insights from leading economists, research analysts and investment professionals. Whether you're new to bonds or a seasoned investor, tune in to all the credit wherever you get your podcasts. This podcast is intended solely for professional investor use. Past performance is not a guarantee of future results.

[B]

Welcome back. This is Long and Short, which is the portion of the show where we go long things we like and short things we don't like. Oliver, are you long or short something today?

[D]

Long something.

[B]

Right on. Make us rich. What do you got?

[D]

I am long. The Trump inspired M and A.

[C]

Boom.

[B]

Woo. There's gonna be deals. There's more to come.

[D]

Yeah, there was some uncertainty. There was some jitters early on Allied Liberation Day. But what we see right now is there's a world in which a lot of companies are seeing, like the opportunity to do big deals. And I think that's a trend that is going to continue.

[B]

James, are you long or short? Something big.

[C]

Short.

[B]

All right, hit me.

[C]

I'm taking the short on Ollie's long.

[B]

I love that.

[D]

Oh, God.

[C]

And I have to.

[B]

So it's not gonna happen. Why is it not gonna happen?

[C]

I've been bearish on this kind of return of animal spirits and I agree. We're starting to see people thinking unthinkable. But there's one thing that is never good for deal making and is that's uncertainty. And Trump is the emperor, the king of uncertainty. And something will go wrong. We'll have a massive freakout and Emana.

[B]

Will go into another.

[C]

Ollie and I will be taking long holidays and stuff.

[B]

All right, well, today I am long old people smoking pot. I don't know if you guys noticed.

[D]

This this week that you're high, but I've been talking for the whole episode.

[B]

Well, I'm not talking about myself, but thank you for thinking of me. Oliver. I'm talking about the fact that cannabis companies got a boost when the president about who we've been speaking so much today posted a video from a consortium that supports the idea of using cannabis as a health care alternative for old people. And I just think, you know, once you get to a certain age, whatever works, man.

[D]

It's a nice full circle moment too. Cause there's no better compliment to a video game than a spliff. So I hear. So I hear.

[B]

Listeners, thank you for tuning in to this conversation. Whether you are stoned or not, we will be back in your feeds on Thursday. Until then, stay frosty out there. Unhedged is produced by Jake Harper and edited by Bryant Urstadt. Our executive producer is Jacob Goldstein. Topher forges is the FT's acting co head of Audio. Special thanks to Laura Clark, Alistair Mackey, Greta Cohn and Natalie Sadler. FT Premium subscribers can get the Unhedged newsletter for free. A 30 day free trial is available to everyone else. Just go to ft.com unhedged offer I'm Rob Armstrong. Thanks for listening.