Caesars Interactive Sells Playtika to Chinese Consortium, Keeps WSOP

Preliminary reports that surfaced last week regarding the possible splitting apart of Caesars Interactive Entertainment, Inc. [CIE], via the sale of the division’s social-gaming components to a prominent Chinese online-gaming consortium have come to fruition.  On Saturday, Caesars’ deal-making entity, Caesars Acquisition Corp. and Shanghai Giant Network Technology Co., Ltd. jointly announced the sale of CIE’s social-and-mobile-gaming unit, Playtika.

Playtika_logoThe potential deal had surfaced a little over a week ago, and the confirmed sale price of $4.4 billion is a little bit higher than the $4.2 billion figure widely cited in initial reports by business analysts.  The Chiba-based consortiumm centered on Shanghai Giant is already deeply experienced in the social-gaming market, with Giant chairman and Chinese billionaire Shi Yuzhu the key figure in putting together the deal.

CIE’s divestiture of its Playtika brand and assets is notable because the World Series of Poker and all related components, including the slowly-growing online-poker offerings, will remain part of CIE and thus, a part of the Caesars family.  The $4.4 billion sale, an all-cash infusion, will also help pressures connected to ongoing bankruptcy proceedings of Caesars Entertainment Operating Company [CEOC], another major operational component of Caesars’ complex corporate family.

Though the WSOP does not represent a truly significant slice of Caesars’ overall revenue, it is nonetheless one of its parent company’s most profitable components.  Being able to slice off Playtika for a cash infusion while retaining the WSOP in its entirety appears to be a significant win for Caesars.

Here’s the complete announcement offered by Caesars, Giant, and Playtika:

Consortium Including Affiliates Of Giant Agrees To Acquire Playtika Unit For $4.4 Billion In Deal With Caesars Interactive Entertainment

HERZLIYA, Israel, LAS VEGAS, and SHANGHAI, July 30, 2016 — A consortium (the “Consortium”) including an affiliate of Shanghai Giant Network Technology Co., Ltd. (parent company ticker symbol: SZ:002558) (“Giant”), one of China’s largest online games companies, announced today it has entered into a definitive agreement with Caesars Interactive Entertainment, Inc. (“CIE”) to acquire CIE’s social and mobile games business (“Playtika”) in an all-cash deal for $4.4 billion.

The Consortium includes Giant Investment (HK) Limited; Yunfeng Capital, a private equity firm founded by Alibaba Group Holding Ltd. founder Jack Ma; China Oceanwide Holdings Group Co., Ltd.; China Minsheng Trust Co., Ltd.; CDH China HF Holdings Company Limited; and Hony Capital Fund.

Following the transaction Playtika will continue to run independently with its headquarters remaining in Herzliya, Israel and its existing management team continuing to run day-to-day operations.

“This transaction is a testament to Playtika’s unique culture and the innovative spirit of our employees who for the past six years have consistently designed, produced and operated some of the most compelling, immersive and creative social games in the world,” said Robert Antokol, Co-Founder and CEO of Playtika. “We are incredibly excited by the commercial opportunities the Consortium will make available to us, particularly in its ability to provide us access to large and rapidly growing emerging markets. This is an amazing milestone for all Playtikans and we truly value how unique this opportunity is to continue executing our vision with such a strong partner.”

Playtika, headquartered in Israel with additional studios and offices in Argentina, Australia, Belarus, Canada, Japan, Romania, Ukraine and the United States, is a leading global social and mobile free-to-play games company. Through its core technology and expertise in big data, analytics, and M&A, Playtika has successfully developed a scalable platform that is primed for future international expansion.

“Playtika’s growth has been exceptional, and highlights its outstanding team, excellent corporate culture, cutting-edge big data analytics, and its unique ability to transform and grow games,” said a representative of the Consortium, Giant’s founder and Chairman Shi Yuzhu. “We are looking forward to Playtika continuing to innovate and excel.”

“It has been a particularly rewarding experience growing Playtika from a 10-person start-up, when CIE acquired them in 2011, into a global leader,” said Caesars Interactive Entertainment Chairman and CEO, Mitch Garber. “Playtika today is a highly profitable growth company with more than 1,300 employees, multiple top grossing titles and millions of daily users. Robert is a true visionary and Israeli business leader who has created not only a great business, but also the most unique corporate culture I have seen in my career.”

The transaction is subject to customary regulatory approvals and other closing conditions, and is expected to close in the third or fourth calendar quarter of 2016.

CIE’s World Series of Poker and real-money online gaming businesses will not be included in the transaction, and the virtual currency used on the Playtika platform will continue not to be exchangeable for real money.

Raine Group LLC served as financial advisor and Latham & Watkins LLP served as legal advisor to CIE.

CODE Advisors LLC served as financial advisor and Fenwick & West LLP served as legal advisor to Giant.


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