In a new regulatory filing, Electronic Arts outlined a number of the risks the company faces, and one of them is the company’s own $55 billion sale to a private investor consortium led by Saudi Arabia’s Public Investment Fund (PIF).
The Securities & Exchange Commission requires companies to disclose risks to its business activity in quarterly 10-Q filings. EA disclosed these as per usual, but a new risk this time around is specific to its pending sale to the PIF, Silver Lake, and Affinity Partners.
Specific to the merger, EA said “uncertainty about the effect of the merger may impair our ability to attract, retain, and motivate key personnel, and could cause customers, suppliers, financial counterparties, and others to seek to change existing business relationships with us.”
When the PIF emerged as the leading investor in the consortium to buy EA, one of the first reactions pertained to Saudi Arabia’s history of human rights violations. Some of the teams inside EA, including BioWare and Maxis, are known for making pro-diversity games featuring inclusive storytelling and characters. Longtime BioWare writer Patrick Weekes, who was laid off earlier this year, speculated that EA’s new owners, including the PIF, might want to avoid “gay stuff” and politics that the PIF’s leadership does not agree with. Weekes theorized that EA might straight-up close or otherwise get rid of BioWare to avoid any concerns, should the deal materialize.
Rhys Elliott of Alinea Analytics predicted some staff will leave EA voluntarily due to Saudi Arabia’s history with human rights issues. Already, a group of EA employees wrote a letter to jointly speak out against the proposed sale, expressing a range of issues and concerns about it, including the possibility of mass layoffs and studio closures. The $55 billion sale is the largest leveraged buyout (LBO) in history for any industry, and EA is on the hook for $20 billion. The company is expected to use its own earnings and assets to make the debt repayments, and many fear layoffs and closures could come as well.
EA’s 10-Q filing does not mention humanitarian issues by name, instead referring only to more open-ended “uncertainty” pertaining to a possible negative effect of attracting, retaining, and hiring talent if the PIF, Silver Lake, and Affinity close the deal to buy EA.
EA claims it will retain “creative control”
Stephen Totilo of Game File also noticed that EA filed an updated Schedule 14A proxy statement that discusses what impact a sale to the investor consortium could have on EA’s culture. The document makes the claim that EA’s “mission, values, and commitment to players and fans around the world” would be “unchanged.”
The filing also states that the investor consortium is “supportive and committed to” investing in EA’s employees and its “strong culture.” Additionally, the document states that EA, not the investor consortium, will “maintain creative control” of the company going forward, adding that EA’s “track record of creative freedom and player-first values will remain intact.”
Other risks related to the merger
Some of the other “merger risks” that EA laid out in its filing included EA’s possible inability to pursue other business deals that could be advantageous due to the $55 billion sale being underway.
EA also mentioned that it has already, and will continue to, incur “significant costs” and expenses for fees and professional services related to the pending buyout. If the deal doesn’t close, EA would still be on the hook for these payments, and potentially up to $1 billion in a termination fee to the consortium.
What’s more, EA said the deal could take longer than expected to close, it might face lawsuits from the board of directors about it, and public stockholders may raise concerns.
These risks are separate from the “strategic risks” that EA disclosed in the 10-Q as well. Some of these risks include EA deriving a “significant portion” of its revenue from a “few” franchises. EA mentioned the EA Sports FC series as an example here, saying the annual franchise brings in lots of money each year, and if something happened that would impact this–like a delay or cancellation, loss of a license, or bad reviews–that could be problematic. Another risk is an outside contracted developer failing to meet contractural expectations, or if a new console comes out and fails to find a big audience, EA said.
Hurricanes, earthquakes, and tariffs
There are a series of “operational risks” highlighted in the document as well, including natural disasters. EA noted that its corporate headquarters in Redwood City, California is near a fault line and some of its other offices, like in Los Angeles and Orlando, are “vulnerable to natural disasters and weather events such as wildfires and hurricanes.” EA also noted that a major weather event could interrupt the power grid, which could negatively affect EA’s ability to do business.
Additionally, EA called out US President Donald Trump’s much-criticized tariff and immigration policies as possible risks to its business. “Relations between the United States and countries in which we have operations and sales have been impacted by events such as immigration policies and the adoption or expansion of trade restrictions, including tariffs and economic sanctions, that may have a material impact on our operations and financial results,” EA said.
“For example, the imposition of tariffs by the U.S. government on imported goods and any retaliatory tariffs from foreign governments could result in increased costs and uncertainty that may negatively affect global economic conditions and activity and negatively affect our business and the businesses of our partners.”
EA’s sale to the investor consortium is expected to close in 2026. Some experts believe the deal may face a smoother regulatory process due in part to Affinity Partners boss Jared Kushner being the son-in-law of Trump. Keep checking back with GameSpot for the latest on the deal.
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