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

The Wall Street bank led by JPMorgan Chase (JPM.US) has 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 Capital, Saudi Arabia’s Public Investment Fund (PIF), and Affinity Partners, which is managed by Jared Kushner, son-in-law of former U.S. President Donald Trump. 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, 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 dollar-denominated loan led by JPMorgan, which also includes approximately €1.75 billion in euro-denominated loans—JPMorgan is also 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 funding for Silver Lake Capital, PIF, and Affinity Partners’ acquisition of EA. JPMorgan will share the $20 billion debt with about 20 other lenders, including Bank of America, Citigroup, and Morgan Stanley—one of the largest-ever acquisition commitments.

This deal is one of 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.

This year, M&A-related loans are expected to be very active, with a highlight being Hologic Inc.'s acquisition deal valued at $7.25 billion, which has seen strong demand and is the largest leveraged loan since 2021.

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