JPMorgan Chase (JPM.US) launches a $5.75 billion loan sale to support Electronic Arts (EA.US)'s massive privatization effort

Led by JPMorgan Chase (JPM.US), Wall Street banks have launched a $5.75 billion cross-border leveraged loan sale to help acquire video game manufacturer Electronic Arts (EA.US), one of the largest deals of its kind. EA will be acquired by a consortium consisting of private equity firm Silver Lake Partners, Saudi Arabia’s Public Investment Fund (PIF), and Affinity Partners, which is managed by Jared Kushner, former President Trump’s son-in-law. The deal values the gaming company at approximately $55 billion.

A $4 billion loan is being sold at a discount of about 98.50 cents on the dollar, meaning investors pay only $0.985 for every $1 of face value purchased. This discount aims to boost investors’ effective returns to compensate for the credit pressure associated with the total deal size of up to $55 billion. In addition to the discount, the loan’s interest rate is set at 3.50 to 3.75 percentage points above the benchmark rate.

This $4 billion is part of the $5.75 billion loan denominated in U.S. dollars led by JPMorgan Chase, which also includes approximately €1.75 billion in euro-denominated loans—JPMorgan is marketing a €1.53 billion (about $1.75 billion) loan with similar pricing terms. According to a source familiar with the matter, lenders will hold a conference call at 10 a.m. Eastern Time on Tuesday to discuss the deal. The deadline for commitments is March 23.

All these debt instruments together form the underlying financing supporting Silver Lake Partners, PIF, and Affinity Partners’ acquisition of EA. JPMorgan Chase will share the $20 billion debt burden with about 20 other lenders, including Bank of America, Citigroup, and Morgan Stanley—one of the largest acquisition financings ever.

This deal is among the largest leveraged buyouts ever, surpassing the approximately $45 billion TXU acquisition in 2007, highlighting Wall Street’s willingness to support major transactions despite economic concerns and high valuations.

Loan activity related to mergers and acquisitions is expected to be very active this year, with a highlight being Hologic Inc.'s $7.25 billion acquisition, which has seen strong demand and is the largest leveraged loan since 2021.

However, market turbulence caused by the Iran war and disruptive impacts of artificial intelligence will test investors’ appetite for financing EA, as these upheavals have already severely impacted secondary loan prices.