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Chinese Consortium Braces Mobile Gaming Position, Buys Caesars Online Games Unit in $4.4B Deal

| Aug 03, 2016 11:55 PM EDT

An expo participant explains how online casino is played at the Global Gaming Expo in Macau in 2014.

A group of Chinese companies, led by Shanghai Giant Network Technology Co, has agreed to buy Playtika Ltd, an Israeli online gaming developer, from Caesars Entertainment Corp for $4.4 billion, China Daily reported.

The move is seen as part of the group's effort to increase its presence in the mobile gaming market, according to analysts.

"Acquiring Playtika would help the company diversify its portfolio by adding social casino games and get a more global customer base under its belt, providing an additional subcategory specialization that they didn't have before and can now use to target new markets," Bin Dai, region director of Greater China at App Annie, said.

The consortium was made up of 11 investors which included Jack Ma's private equity firm Yunfeng Capital, China Minsheng Trust Co and Hony Capital Fund, and China Oceanwide Holdings Group Co, among others.

Playtika will run independently and continue with its operations in Israel, the consortium said.

"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," Robert Antokol, co-founder and CEO of Playtika, said.

According to its official website portfolio, Playtika, which was established in 2010, introduced the first free-to-play casino-style games to social networks, different from the traditional online gambling games.

Shanghai Giant Network Technology said in a statement that the virtual currency used in Playtika could not be exchanged for real money.

Playtika is acknowledged as the leader in social chess and card games in the North America market, with an average growth of 50 to 55 percent, He Jie, an analyst at internet large data products and service provider Analysys, said.

Shi Yuzhu, founder and chairman of the Giant Network Technology, decided to restructure the company's gaming business, starting in the second half of 2015, with the aim to make a major transition to mobile play.

Giant Network Technology had been previously offered to buy Supercell, the maker of "Clash of Clans", but it failed as Tencent-led consortium announced that it would pay $8.6 billion for Supercell and buy 84.3 percent stake in it, seen as the highest acquisition price in the gaming industry.

The revenue in the mobile game sector in China is expected to reach $10 billion this year, market research agency Newzoo estimated. The agency also predicted that the country will continue to become the biggest games market in the future, with revenue to reach $28.9 billion by 2019.

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