UPDATE 1-Chinese consortium concurs $4.4 bln deal for Caesars online video games

Jack Ma, creator and Executive Chairman of Alibaba Group speaks during the inaugural “Xin” Philanthropy Conference in Hangzhou, Zhejiang Province, China, July 9, 2016. China Daily/via

Reuters

<articleLocation” > A Chinese consortium that includes video game designer Shanghai Giant Network Innovation Co Ltd and e-commerce business Alibaba Group Holding Ltd (BABA.N) founder Jack Ma has agreed to get Caesars Interactive Home entertainment Inc’s online video games unit for $4.4 billion in cash, the companies said. Caesars Interactive Home entertainment is currently owned by Caesars Acquisition Co (CAC) (CACQ.O) and Caesars Entertainment Corp CRZ.O. The sale will be a boon to the 2 affiliated business, which are looking for money as they embark on a complicated merger. The deal follows a duration of special negotiations in between Caesars Interactive Home entertainment and Giant’s consortium that were first reported on July 21 by Reuters. Caesars Home entertainment’s main operating unit, Caesars Entertainment Operating Co Inc (CEOC), is presently associated with an $18 billion bankruptcy and is looking for creditor approval for a restructuring plan. The transaction in between CAC and the Caesars Entertainment parent is part of a complex web of deals that have come under analysis by CEOC’s creditors. Chinese business aspire to broaden beyond their house nation, which boasts the world’s largest online video gaming market. In June, Tencent Holdings Ltd (0700. HK), China’s biggest gaming group, consented to purchase a bulk stake in ‘Clash of Clans’ mobile game maker Supercell from SoftBank Group Corp (9984. T) in an $8.6 billion deal.

Caesars’ online video games company, referred to as Playtika, makes its games such as Bingo Blitz and Slotomania available on Apple Inc’s (AAPL.O) App Store. Playatika will continue to operate separately with its own management group and its head office staying in Herzliya, Israel, following the offer, the companies said. Playtika players utilize virtual currency that can not be exchanged for real cash, although gamers can invest cash by buying products in the games. Caesars’ World Series of Poker and real-money online video gaming businesses are not part of the offer, according to the companies. Giant is among China’s biggest gaming business, with almost 50 million month-to-month 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 Business Limited, and Hony Capital Fund, the business stated. The merger between the owners of Caesars Interactive Home entertainment is intertwined with the bankruptcy of CEOC, whose restructuring plan depends upon billions of dollars of money and equity from its moms and dad.

CEOC’s lenders have implicated the moms and dad company of looting choice assets from its operating system and leaving it bankrupt. Caesars has said the acquisitions were done at reasonable value. While profits from a Caesars Interactive online video games unit sale will help the bankruptcy estate, junior lenders may still object to the circulation of the funds since more cash will wind up in the hands of first lien banks and lenders. Junior creditors led by Appaloosa Management remain the greatest hold-outs in the CEOC bankruptcy, and have said they have as much as $12 billion in insurance claims versus Caesars Entertainment and its private equity backers, Apollo Global Management LLC (APO.N) and TPG Capital LP. (Reporting by Liana B. Baker in New York and Allison Lampert in Montreal; Added reporting by Tracy Rucinski in Chicago).

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