Goldman Sachs’ $110mn EA deal fee sets record for the bank

Unlock the Editor’s Digest for freeRoula Khalaf, Editor of the FT, selects her favorite tales on this weekly e-newsletter.Goldman Sachs is about to earn a $110mn payment for advising Digital Arts on its file $55bn take-private deal, making it probably the most profitable M&A transaction within the Wall Road funding financial institution’s historical past. A consortium of Saudi Arabia’s Public Funding Fund, non-public fairness group Silver Lake and Jared Kushner’s funding agency Affinity Companions agreed to accumulate the online game maker in September.Goldman served as EA’s sole adviser on what ranks as the most important leveraged buyout of all time.The payment comes amid a deluge of huge offers throughout company America — fuelled by regular debt markets, lighter competitors oversight and chief executives’ confidence over the power of the US economic system — which have led to large payouts to advisers.Financial institution of America is poised to earn a $130mn payment from its position advising railway big Union Pacific’s $85bn takeover of rival Norfolk Southern earlier this 12 months, eclipsing the $123mn payment JPMorgan Chase generated from advising on drugmaker AbbVie’s $63bn acquisition of Allergan in 2020.  In keeping with a securities submitting on Monday, Goldman was paid $10mn when the EA deal was introduced, with the remaining $100mn due when the transaction closes, which requires shareholder and regulatory approval.EA had not paid Goldman any advisory or underwriting charges within the earlier two years, the submitting disclosed. Nevertheless, Goldman had earned $24mn and $154mn for work with PIF and Silver Lake, respectively, within the earlier 24 months.Goldman individually had a $1.3bn stake in PIF and a $200mn stake in Silver Lake funds as of September.The submitting exhibits Silver Lake first approached EA’s chief government in early March a couple of doable transaction. The Saudi sovereign wealth fund, which already owned a tenth of EA, and Affinity joined the bidding group shortly thereafter.The group made its preliminary provide for EA in early September for $200 per share, finally putting a deal at $210 a share on the finish of the month — a 25 per cent premium over its share worth on the time. Kushner’s funding agency would find yourself proudly owning about 5 per cent of EA, whereas PIF would change into a majority proprietor and Silver Lake a big minority proprietor following the deal, the Monetary Instances beforehand reported. The deal is about to shut within the first half of subsequent 12 months. RecommendedGoldman’s largest publicly disclosed payment to this point got here from the 2024 sale of Pop Tarts-maker Kellanova to Mars for $36bn, for which the funding financial institution earned $93mn. JPMorgan is main a $20bn financing for the EA deal, which is predicted to web a whole bunch of hundreds of thousands of {dollars} in separate charges for a big consortium of banks.  Goldman Sachs declined to remark.