A Chinese consortium that
includes game developer Shanghai Giant Network Technology and e-commerce
company Alibaba Group Holding founder Jack Ma has agreed to acquire Caesars
Interactive Entertainment Inc's online games unit for $4.4 billion in cash, the
companies said.
Caesars Interactive
Entertainment is currently owned by Caesars Acquisition and Caesars
Entertainment. The sale will be a boon to the two affiliated companies, which
are looking for cash as they embark on a complex merger.
The deal follows a period of
exclusive negotiations between Caesars Interactive Entertainment and Giant's
consortium that were first reported on July 21 by Reuters.
Caesars Entertainment's main
operating unit, Caesars Entertainment Operating Co is currently involved in an
$18 billion bankruptcy and is seeking creditor approval for a restructuring
plan. The transaction between CAC and the Caesars Entertainment parent is part
of a complex web of deals that have come under scrutiny by CEOC's creditors.
Chinese companies are eager
to expand beyond their home country, which boasts the world's largest online
gaming market. In June, Tencent Holdings , China's biggest gaming group, agreed
to buy a majority stake in 'Clash of Clans' mobile game maker Supercell from
SoftBank Group in an $8.6 billion deal.
Caesars' online games
business, known as Playtika, makes its games such as Bingo Blitz and Slotomania
available on Apple's App Store. Playatika will continue to operate
independently with its own management team and its headquarters remaining in
Herzliya, Israel, following the deal, the companies said.
Playtika players use virtual
currency that cannot be exchanged for real money, although players can spend
money by buying items in the games. Caesars' World Series of Poker and real-money
online gaming businesses are not part of the deal, according to the companies.
Giant is one of China's
biggest gaming companies, with nearly 50 million monthly active users and
several top-grossing mobile titles. It was taken private in 2014 for $3 billion
by a group of buyers that included company Chairman Yuzhu Shi and private
equity firm Baring Private Equity Asia Ltd. It is now valued at more than $12
billion.
The Chinese consortium
involved in the deal also includes Ma's private equity firm Yunfeng Capital,
China Oceanwide Holdings Group Co, China Minsheng Trust Co, CDH China HF
Holdings Company Limited, and Hony Capital Fund, the companies said.
The merger between the
owners of Caesars Interactive Entertainment is intertwined with the bankruptcy
of CEOC, whose restructuring plan hinges on billions of dollars of cash and
equity from its parent.
CEOC's creditors have
accused the parent company of looting choice assets from its operating unit and
leaving it bankrupt. Caesars has said the acquisitions were done at fair value.
While proceeds from a
Caesars Interactive online games unit sale will help the bankruptcy estate,
junior creditors may still object to the distribution of the funds because more
money will end up in the hands of first lien banks and lenders.
Junior creditors led by
Appaloosa Management remain the biggest hold-outs in the CEOC bankruptcy, and
have said they have as much as $12 billion in claims against Caesars
Entertainment and its private equity backers, Apollo Global Management LLC and
TPG Capital LP.
Fox Reports
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