Private Equity Firms May Be Eyeing Playtika, Fueling Stock Surge
Playtika's stock soared on Thursday after news broke that at least two private equity firms, Advent International and CVC Capital Partners, were considering acquiring the mobile games developer.
Dealreporter announced the potential takeover, coming just a few months after initial reports suggested other private equity groups had shown interest in the Israeli gaming firm. Following the news, shares of Playtika were up 8.21% on high trading volume, pushing it towards a closing price above $11 for the first time since late April.
Playtika, formerly a subsidiary of Caesars Entertainment, creates popular social casino games like Bingo Blitz, Caesars Slots, Slotomania, and World Series of Poker (WSOP) Social.
Playtika's Consideration of Outside Investment
Playtika's interest in a possible investment or outright sale hasn't been a secret. The company publicly announced a strategic review, potentially including a sale, back in February 2022.
No specific acquisition prices from Advent and CVC were mentioned. Playtika currently has a market cap of $3.96 billion, and Caesars sold it to a group of Chinese investors for $4.4 billion in 2016. That group, Playtika Holding UK II Limited (PHUK II), remains Playtika's largest shareholder, suggesting they may not agree to a deal undervaluing the mobile gaming company.
Prior to these rumors, Joffre Capital had intended to take control of Playtika. However, those efforts were halted when Joffre Managing Partner and co-founder James Lu stepped down from the Playtika board, criticizing the board's lack of independence and claiming the directors were controlled by management.
Strategies of Playtika Attractive to Acquirers
Playtika's ability to generate revenue through in-app sales makes it an appealing target for potential buyers. Their games are often free-to-play, with in-game purchases enhancing the gaming experience. Although some consumers dislike this business model due to spending real money for virtual items, it hasn't deterred potential suitors.
CVC's interest in Playtika is also logical since the firm already has a stake in Gaming1 and European sportsbook giant Tipico.
"Gaming1 is a leader in the Belgian gaming market and is present in nine countries around the world, including Portugal, France, and the United States with their joint venture Gamewise founded with the American giant Delaware North," stated CVC.
Advent International, on the other hand, lacks direct gaming exposure in its portfolio. However, the company holds shares in well-known consumer and technology brands such as Coffee Bean & Tea Leaf, Lululemon, and Transunion, among others.
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