A group of Chinese investors backed by billionaire Jack Ma has agreed to buy casino-style gamesmaker Playtika from Caesars Interactive Entertainment (CIE) for $4.4 billion.
The consortium, led by Shanghai Giant Network Technology, includes Ma’s private equity firm Yunfeng Capital as well as China Oceanwide Holdings Group Co., China Minsheng Trust Co., and Hony Capital Fund, the buyers said in a statement.
The announcement came a week after Caesars Acquisition Co. started “exclusive talks” with the Chinese consortium following an auction that also included U.S. toymaker Hasbro Inc. and South Korean mobile game company Netmarble Games.”
The acquisition is expected to close in the third or fourth quarter of 2016.
Despite the acquisition, there are no plans to cut jobs or move Playtika out of its headquarters. The consortium said the online games unit will remain independently run from Herzliya, Israel, and its existing management team will continue to run day-to-day operations.
The all-cash deal marks the consortium’s foray into the fast-growing mobile games market in China. Online gambling is outlawed in China, except for some forms of sports “guessing” games and licensed casinos in Macau, but Playtika’s platform do not involve betting. The company employs the so-called “freemium model”—games like Slotomania and Bingo Blitz can be played for free, but players can opt to buy extra services.
The virtual currency used in the Playtika platform cannot be exchanged for real money, and this approach will remain even under the new ownership, the consortium said.
CIE’s parent, Caesars Entertainment, had been mulling to sell its interactive games unit as part of the company’s restructuring, even though the online division—which also owns the World Series of Poker brand and Caesars’ real-money online gambling operation—is one of the few branches of the Caesars family tree that actually makes money. CIE will continue to operate its real-money online gambling business and WSOP brand.
Selling Playtika will pump the much-needed cash into a new group that will be created once Caesars Acquisition Co (CAC) and Caesars Entertainment Corp. (CEC) merges. CEC is struggling to restructure its bankrupt main unit, Caesars Entertainment Operating Co (CEOC), from which CIE was spun off pre-bankruptcy. CEOC’s creditors, however, are insisting CEC should be forced to contribute billions more to the restructuring than CEC has offered to date.