Electronic Arts will be taken private for $210 per share in a $55 billion deal. It's the largest leveraged buyout ever and includes Silver Lake and Saudi Arabia's PIF.
News of a potential deal leaked out Friday afternoon and shares jumped 15% to $193 from $172. They're trading at $204 in the premarket.
This is the largest leveraged buyout ever, at least in nominal terms. Here are the previous record holders:
TXU / Energy Future Holdings (2007) — ~$45 billion
Equity Office Properties (2007) — ~$38–39 billion
HCA (Hospital Corporation of America) (2006) — ~$32–33 billion
RJR Nabisco (1989) — ~$31.1 billion
First Data (2007) — ~$29 billion
What's worrisome about that fact is the dates on the previous record holders. There was something of an LBO frenzy in the year before the financial crisis.
There are a couple lessons here for traders. The first one is that it pays to stay at the screens until the Friday close. News often leaks on on Friday afternoons and even chasing it at the highs on Friday resulted in a nice profit.
The second one -- and this is a pattern -- is that the WSJ sandbags takeover values in this kind of reporting. They wrote:
"Discussions on price are still underway but EA could be valued at as much as $50 billion, two of the people said," in the report.
In general, that means the price is above $50 billion and that was the case today again. It's not a rock solid deal but it usualy works and did again today.
