Key Morningstar Metrics for Electronic Arts
- Fair Value Estimate: $200.00
- Morningstar Rating: ★★
- Morningstar Economic Moat Rating: Narrow
- Morningstar Uncertainty Rating: Medium
Electronic Arts EA has agreed to be taken private by a consortium of investors led by the Saudi Arabia Public Investment Fund for $210 per share. The firm expects the deal to be completed in its fiscal first quarter of 2027, which ends on June 30, 2026.
Why it matters: The board of directors’ approval of a definitive agreement and the financing the consortium has secured, including $20 billion in debt from JP Morgan, lead us to believe this deal is all but certain to close. There appears to be no opportunity for another suitor to offer a competing bid.
- Shareholders must approve the deal, but considering the 17% premium to the stock’s all-time high set in August, we think approval is all but certain. The PIF already owns 10% of the firm, and three other institutions collectively own 25%. No other shareholder owns more than 5% of the company.
- The size of this deal will require approval from regulators, but we don’t expect difficulty. No anticompetition concerns should get in the way. The Saudi government has a good relationship with the current US presidential administration, and Jared Kushner’s firm is part of the consortium.
The bottom line: We are raising our fair value estimate to $200 per share from $150, reflecting the present value of the deal definitely closing in the spring of 2026.
- We assigned EA a narrow moat and like its business, with its focus on annually released sports-focused games, more than any publicly traded video game peers.
- However, we think the buoyant general market environment has led to a higher valuation in this deal than the firm’s current operating and financial position independently justifies. Shareholders have received a big win.
