Chinese Investor Group Buys Israel-Based Online-Games Firm for $4.4 billion in cash

A Chinese consortium led by Shanghai Giant Network Technology Co. and joined by a fleet of financial moguls including a private-equity arm set up by Alibaba founder Jack Ma has agreed to purchase an Israeli games business for $4.4 billion in cash.

The consortium of 11 investors—including Giant Investment Ltd., Yunfeng Capital, a private-equity firm co-founded by Alibaba Group Holding ’s Mr. Ma, China Oceanwide Holdings Group Co., China Minsheng Trust Co., CDH China HF Holdings Company and Hony Capital Fund—will purchase a 100% stake in Caesars Interactive Entertainment’s subsidiaries, including mobile-games unit
Playtika. A statement announcing the deal was released Sunday by Shenzhen-listed Chongqing New Century Cruise Co., a shell company bought by Giant Interactive Group last year.

Caesars Interactive Entertainment is a subsidiary under a joint venture between Caesars Acquisition Co. and Caesars Entertainment Corp. It has developed casino-style games including Caesars Casino, Bingo Blitz and World Series of Poker. The deal doesn’t include World Series of Poker and CIE’s real-money online gaming business.

The deal, underscoring the Chinese game developer’s ambition to expand overseas, is another big Israel-focused move by a Chinese firm. China National Chemical Corp. paid $1.44 billion for a 40% stake in crop-protection producer Adama Agricultural Solutions in July and last year Shanghai Bright Food took over Tnuva, Israel’s largest food producer, for more than $2 billion.

Possessing advanced research and development, big data and artificial-intelligence analysis capabilities, Playtika has maintained rapid growth over the past five years, the statement said. Its main business is focused on games such as poker, and it has no presence in China yet. The virtual currency used on the Playtika platforms will remain unexchangeable into real currency, the filing said.

The consortium boosted capital in Alpha Frontier Ltd. in its purchase of CIE’s Playtika, said the statement. Playtika will continue to run independently with its headquarters remaining in Herzliya, while its existing management will oversee daily operations, said the companies.

Playtika’s revenue hit $725 million in 2015 and $456 million in the first half of 2016, according to the filing.

In October 2015, the formerly U.S.-listed Giant Interactive, owned by billionaire Shi Yuzhu, returned to the Shenzhen Stock Exchange via a $2.1 billion reverse merger with Chongqing New Century Cruise Co., which is currently valued at $12.6 billion. Trading in the company’s shares was suspended July 13 because of a major asset restructuring.

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