Chinese consortium agrees to $4.4 billion deal for Caesars online games

A Chinese consortium that includes game developer Shanghai Giant Network Technology Co. Ltd. and e-commerce company Alibaba Group Holding Ltd. founder Jack Ma has agreed to acquire Caesars Interactive Entertainment Inc.’s online games unit for $4.4 billion in cash, the companies said on Sunday.

Caesars Interactive Entertainment is owned by Caesars Acquisition Co. and Caesars Entertainment Corp. The sale will be a boon to the two affiliated companies, which are looking for cash as they embark on a complex merger.

The sales price is near the unsolicited bids for $4 billion that the interactive unit began drawing in May. The deal, which is subject to regulatory approvals, is expected to close in the third or fourth quarter, Bloomberg News reported.

Caesars’ World Series of Poker and real-money online gaming businesses aren’t part of the deal, the companies said.

Caesars Entertainment’s main operating unit, Caesars Entertainment Operating Co., is involved in an $18 billion bankruptcy and is seeking creditor approval for a restructuring plan. The transaction between Caesars Acquisition and the Caesars Entertainment parent is part of a complex web of deals that have faced scrutiny from the operating unit’s creditors.

Caesars’ online games business, known as Playtika, makes its games such as Bingo Blitz and Slotomania available on Apple’s App Store. Playtika will continue to operate independently with its own management team after the deal, the companies said; Playtika’s headquarters will stay in Herzliya, Israel.

Playtika’s revenue hit $725 million in 2015 and $456 million in this year’s first half, Bloomberg News reported.

Playtika players use virtual currency that can’t be exchanged for real money, although players can spend money by buying items in the games. Organized gambling is illegal in China except for licensed casinos in Macau.

Eilers Research has said Caesars Interactive bought Playtika for $103 million in 2011; Caesars added to the unit by acquiring Buffalo Studios in 2012 and Pacific Interactive in 2014.

“Playtika today is a highly profitable growth company with more than1,300 employees, multiple top grossing titles and millions of daily users,” Caesars Interactive Entertainment Chairman and CEO Mitch Garber said in a statement.

Giant, valued at more than $12 billion, is one of China’s biggest gaming companies. 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.

Giant has nearly 50 million monthly active users and several top-grossing mobile titles.

The merger between the owners of Caesars Interactive Entertainment is intertwined with the bankruptcy of the Caesars operating unit, which will rely on billions of dollars of cash and equity from its parent in its restructuring plan.

The operating unit’s creditors have accused the parent company of looting choice assets and leaving the unit bankrupt. Caesars has said the acquisitions were done at fair value.

Proceeds from a Caesars Interactive online games unit sale will probably help the bankruptcy estate, but junior creditors may still object to the distribution of the funds because more money will go to first-lien banks and lenders.

Las Vegas Review-Journal writer Matthew Crowley contributed to this report Contact him at mcrowley@reviewjournal.com. Follow@copyjockey on Twitter.