Investors led by Chinese online games developer Shanghai Giant Network Technology Co (上海巨人網絡科技有限公司) agreed to buy Caesars Entertainment Corp’s online casino-style games unit Playtika Ltd for US$4.4 billion in cash, even as gambling remains illegal in the Asian country.
The consortium includes Yunfeng Capital (雲峰基金), the private equity company founded by Alibaba Group Holding Ltd chairman Jack Ma (馬雲), China Oceanwide Holdings Group Co (中泛控股), China Minsheng Trust Co and Hony Capital Fund, the purchasers said yesterday in a statement.
Playtika will remain independently run from its headquarters in Herliya, Israel, they said.
The deal gives the Chinese buyers a foothold in a fast-growing segment of the gaming industry, as users turn to mobile applications over the PC and console-based systems.
Organized gambling is illegal in China with the exception of licensed casinos in Macau, and while rules are not clear for online games, authorities have regularly raided operators.
“Despite the legal issues in China, these Chinese investors are more comfortable playing the long game,” Union Gaming Group LLC analyst Grant Govertsen said. “Online gaming, eventually, should be massive after the various regulatory hurdles are worked out even if it takes a significant number of years.”
Police in Zhejiang Province arrested 36 suspects involved in a lottery-based online gambling operator worth more than 100 million yuan (US$15 million), Xinhua news agency reported on July 1. Last year, Guangdong police busted an online gambling ring that took in US$66 billion in monthly bets, arresting more than 1,071 people involved in 199 Web sites, Xinhua reported.
For Caesars, it is an exit from a business that it bought in 2011 via the Caesars Interactive Entertainment arm.
The unit’s World Series of Poker and real-money online gaming businesses will not be included in the transaction, and the virtual currency used on the Playtika platform will continue not to be exchangeable for real money, according to yesterday’s statement.
Playtika was “the first to introduce free-to-play casino-style games to social networks,” according to the company’s Web site.
Its Caesars Casino game, playable as a Facebook application, includes slot machines, blackjack, roulette and video poker.
“We are incredibly excited by the commercial opportunities the consortium will make available to us, particularly in its ability to provide us access to large and rapidly growing emerging markets,” Playtika cofounder and chief executive officer Robert Antokol said.
China’s Giant had been in talks to acquire the online game unit for more than US$4 billion, according to people familiar with the matter on July 22.
The Giant-led group has emerged as the leading contender for the business after an auction process, said one of the people, asking not to be identified because the matter is private.
“Playtika today is a highly profitable growth company with more than 1,300 employees, multiple top grossing titles and millions of daily users,” Caesars Interactive chairman and chief executive officer Mitch Garber said.
The deal, subject to regulatory approvals, is expected to be completed in the third or fourth quarter of this year.
Raine Group LLC served as Caesars Interactive’s financial adviser and Latham & Watkins LLP served as legal adviser. CODE Advisers LLC was financial adviser and Fenwick & West LLP served as legal adviser to Shanghai Giant.
Shanghai Giant, backed by billionaire Shi Yuzhu (史玉柱), delisted from the New York Stock Exchange in 2014 and entered the Chinese stock market after a reverse merger with Shenzhen-listed Chongqing New Century Cruise Co (重慶新世紀遊輪股份有限公司).
Shares of Chongqing New Century have been suspended since July 13 pending a major transaction involving an “overseas mobile phone games company,” it said.
EXPECTATIONS: The firm, which is on track to outpace global foundry industry revenue growth, said it expects constrained advanced process capacity amid stronger AI demand Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) yesterday increased its projected revenue growth for this year to above 25 percent, as stronger-than-expected demand for premium smartphones and artificial intelligence (AI) devices are to drive greater utilization of cutting-edge 3-nanometer and 5-nanometer chips. In April TSMC estimated 21 to 24 percent annual growth. The firm’s revenue growth is on track to greatly outpace the global foundry industry, which is expected to rise about 10 percent this year. “Over the past three months, we have observed stronger AI and high-end smartphone demand from our customers, which is to boost the overall capacity utilization for our leading-edge
INVESTMENT: The company’s planned complex in Texas would be the first 12-inch silicon wafer fab built in the US in more than 20 years, a GlobalWafers official said GlobalWafers Co (環球晶圓), the world’s No. 3 silicon wafer supplier, yesterday said it secured up to US$400 million in direct funding from the US Department of Commerce under the CHIPS and Science Act for the construction of two new advanced fabs in the US. Its subsidiaries GlobalWafers America and MEMC LLC are to build a 12-inch silicon wafer fab in Sherman, Texas, and another one in Missouri to produce silicon-on-insulator (SOI) wafers used to make leading-edge chips. “With the support of the [US President Joe] Biden Administration, we are honored to be bringing to American shores the world’s most cutting-edge 12-inch semiconductor
Powerchip Semiconductor Manufacturing Co (力積電) yesterday said that net losses ballooned to NT$1.96 billion (US$60.1 million) in the second quarter, as heavy manufacturing costs from a new fab outweighed the improvement in customer demand and factory utilization. That compared with losses of NT$439 million in the first quarter. The company posted a net profit of NT$617 million a year earlier. Gross margin plummeted to 5.3 percent last quarter, from 15.4 percent in the previous quarter and 16.8 percent in the same period last year. It was the weakest since the fourth quarter of last year. The chipmaker blamed heavy depreciation and higher manufacturing
Nikon Corp is fielding strong demand for its legacy chipmaking machines in China, which is mobilizing resources to build its own semiconductor supply chain. Inquiries for the Japanese precision maker’s lithography tools have surged in China, Nikon president Muneaki Tokunari said. The company is set to revamp a lithography machine geared for decades-old manufacturing processes. Its NSR-2205iL1, launching this summer, would serve the market for mature chip technology and Nikon expects to sell more than 10 units of the machine annually, said Tokunari, who is also chief operating officer and chief financial officer. New companies are sprouting up in China to make