How an Israeli company May Have Saved Caesars Entertainment

Chinese Conglomerate acquired an online gaming unit Playtika for $4.4 billion in cash, could be key for restructuring debt; The Chinese consortium says Playtika will remain an independent unit managed from Herzliya.

Playtika

A Chinese consortium has acquired Israeli social games company Playtika from Caesars Interactive Entertainment for $4.4 billion in cash, the companies have announced.

Caesars Entertainment which provides casino entertainment services and owns, operates or manages more than 38 gaming and resort properties in the US and abroad, acquired Playtika in 2011, for about $170 million.

Caesars Entertainment Operating Company buried under $18 billion and debt. The pressure from creditors and a pending Chapter 11 bankruptcy case, Caesars desperately had to free up some cash.

The Chinese consortium (net worth of $23.7 billion) includes Alibaba Group founder Jack Ma and his private equity firm Yunfeng Capital, game developer Shanghai Giant Network Technology, a game developer with roughly 50 million monthly active users of its role-playing games.  China Oceanwide Holdings Group, China Minsheng Trust, CDH China HF Holdings, and Hony Capital Fund.

Based in Herzliya, Israel, Playtika is offering a selection of free-entry games that contain in-app purchasing opportunities. Most popular games include Bingo Blitz and Slotomania and are available on Apple’s App Store. The company’s players use virtual currency that cannot be exchanged for real money but can spent money by purchasing items in the games.

Caesars Interactive Entertainment Chairman and CEO, Mitch Garber said: “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. Playtika today is a highly profitable growth company with more than 1, 300 employees, multiple top grossing titles and millions of daily users.”

The Chinese consortium said that Playtika will continue to operate independently with its own management team at its headquarters in Herzliya, following the acquisition.

Playtika had $725 million in revenue last year, compared with $549 million in 2014 and “only” $54 million in the year the company was acquired. The company’s revenue reached $218.2 million in the first quarter of 2016, 10% quarterly growth and 30% annualized growth, reflecting $900 million annualized revenue, according to Israeli media.

the transaction expected to close in the third or fourth calendar quarter of 2016.

Creditors now have to just wait for regulatory approval.

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