(Oct 30): Bank of America Corp (BofA), Citigroup Inc and Morgan Stanley are among about 20 banks that have joined a US$20 billion debt financing backing the buyout of Electronic Arts Inc (EA), giving them a slice of the massive fees tied to the biggest leveraged buyout ever.
The group, which is expected to also include Barclays plc, was allocated between 1% and 5% of the financing, less than the 10% that some had initially hoped for, according to people with knowledge of the matter, who asked not to be identified because the discussions are private. Participants will take a share of the roughly US$500 million of fees tied to the deal.
The consortium buying the video-game maker — private equity firm Silver Lake Management, Saudi Arabia’s Public Investment Fund (PIF) and Affinity Partners — has been working to broaden the underwriting group after JPMorgan Chase & Co initially agreed to put up the full debt commitment for the US$55 billion take-private.
Representatives for BofA, Barclays and Silver Lake declined to comment. Representatives for JPMorgan, Citigroup, Morgan Stanley, EA, PIF and Affinity didn’t respond to requests for comment.
Big M&A
A buyout of this size is a major test of the banking industry’s capacity to orchestrate and allocate vast amounts of capital on a global scale. It comes amid a general pick up in M&A deals, following several years of muted activity. JPMorgan’s co-head for Europe, the Middle East and Africa, Conor Hillery, expects to see “big M&A in EMEA next year.”
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With the underwriters in place, the plan is to sell the debt in the leveraged loan and high-yield bond markets in early 2026. Banks are expected to earn a fee of about 2.25% on the loans in the financing, Bloomberg previously reported. Fees for bonds will be higher than those of loans.
The dual-currency loan is expected to pay investors 3.5 percentage points more than the benchmark rate, and will have a discounted price of 99 cents on the dollar, the people said.
The cross-border financing is structured with a US$2.5 billion term loan A that will target investors looking to buy loans on a take-and-hold basis. That could attract attention from Middle Eastern and Asian banks.
The financing is also set to comprise an US$8 billion term loan B, US$2.5 billion of unsecured bonds, US$5 billion of secured bonds and a US$2 billion liquidity facility. The final structure of the transaction will depend on market conditions at the time of the launch.
