Caesars Jumps on $4.4 Billion Deal to Sell Playtika Games UnitDaryl Loo and Keith Naughton
Giant, Jack Ma’s fund in accord to buy casino-style gamemaker
Playtika to remain independently run in Israel after deal
Caesars Entertainment Corp. surged as much as 11 percent after agreeing over the weekend to sell casino-style online games unit Playtika Ltd. for $4.4 billion to Chinese investors led by Shanghai Giant Network Technology Co.
The sale could give Caesars, the Las Vegas-based casino operator, more cash to help reach a settlement with bondholders of its largest division, which filed for bankruptcy in January 2015. Caesars acquired Playtika in 2011 via a separate unit, the Caesars Interactive Entertainment arm, which remains the owner of the World Series of Poker and real-money online gaming businesses.
Caesars jumped 6.2 percent to $7.33 at 9:38 a.m. after reaching as high as $7.69 earlier. The shares had sunk 13 percent this year through last week.
The consortium acquiring Playtika includes Yunfeng Capital, the private equity company founded by Alibaba Group Holding Ltd. Chairman Jack Ma; China Oceanwide Holdings Group Co.; China Minsheng Trust Co.; and Hony Capital Fund, the purchasers said last weekend in a statement. Playtika will remain independently run from its headquarters in Herzliya, Israel, they said.
The all-cash deal gives the Chinese buyers a foothold in a fast-growing segment of the gaming industry, as users turn to mobile applications over PC- and console-based systems. The Playtika platform isn’t traditional gambling since its virtual currency cannot be exchanged for real money, an approach that will remain under the new ownership, according to Sunday’s statement. Organized gambling is illegal in China with the exception of licensed casinos in Macau.
The Giant-led consortium had been in talks to acquire the online game unit for more than $4 billion, people familiar with the matter said on July 22. The Chinese group had emerged as the leading contender for the business after an auction process, said one of the people, asking not to be identified because the matter is private.
The deal, subject to regulatory approvals, is expected to be completed in the third or fourth quarter of 2016. Raine Group LLC served as Caesars Interactive’s financial adviser and Latham & Watkins LLP served as legal counsel. CODE Advisers LLC was financial adviser and Fenwick & West LLP served as legal adviser to Shanghai Giant.
Shanghai Giant, backed by billionaire Shi Yuzhu, delisted from the New York Stock Exchange in 2014 and entered the Chinese stock market after a reverse merger with Shenzhen-listed Chongqing New Century Cruise Co. Shares of Chongqing New Century have been suspended since July 13 pending a major transaction involving an “overseas mobile phone games company,” it said.