Technology buyout fund Joffre Capital is acquiring a controlling interest in mobile gaming company Playtika (NASDAQ:PLTK) from majority investor Playtika Holding UK II Limited (PHUK II).
Joffre is paying PHUK II $21 a share for a 20% stake in Playtika — a 46% premium to Monday’s closing price — valuing the Israeli company at $8.5 billion. That’s well in excess of its market capitalization of $5.56 billion.
Under the terms of the transaction, Joffre already paid PHUK II $15 million and has five days from June 26, also known as “the kick-off date,” to deliver another $35 million.
On a date within 30 days of the Kick-Off Date, subject to a potential maximum 30-day extension, and certain conditions, (i) Joffre will pay PHUKII approximately $1.0 billion, minus the Signing Payment and subject to adjustment for any distributions received prior to such date, (ii) PHUKII will deliver the Sold Shares to Joffre and (iii) Joffre will grant to PHUKII a security interest over certain assets to secure Joffre’s obligations for its remaining payments,” according to a filing with the Securities and Exchange Commission (SEC).
Playtika Holding UK is controlled by Chinese investors Giant Network Group Co. Ltd. and Yunfeng Capital. Yunfeng is a private equity group started by Alibaba founder Jack Ma. Playtika revealed in January that the investor was mulling the sale of 15% to 25% of its interest in the gaming company.
Considering that Joffre Capital is paying a hefty premium to get involved with Playtika — the stock hasn’t traded above $21 since April — investors don’t appear impressed, as the shares are lower in early trading. The stock entered Tuesday down 16.77% year-to-date.
Some of that disappointment could stem from now-unrealized hopes that Playtika would outright sell itself. In February, the company said it was considering strategic alternatives, including a possible sale.
The firm was founded in 2010 and was acquired by Caesars Entertainment (NASDAQ:CZR) the following year. Facing a neeed for cash, the casino operator parted with the mobile games company in 2016, selling it a group of Chinese investors for $4.4 billion.
Joffre Capital, which counts former Amazon, Baidu, Blackstone, Warburg Pincus, and Yahoo/Verizon executives among its principles, invests in digital media, e-commerce, interactive entertainment, and software companies.
Other Joffre Capital Transaction Details
As part of its investment in Playtika, Joffre Capital is gaining two seats on the gaming company’s board of directors.
Following the second board appointment, the private equity company will pay PHUK II $773.6 million. Another $222.8 million is due on the 12-month anniversary of the kick-off date, with another $222.8 million payment to be delivered on the 18-month anniversary.
“The Stock Purchase Agreement may be terminated by (i) mutual consent, (ii) by PHUKII if Joffre fails to make any of the Signing Payment, Pre-Closing Payment or Closing Payment, (iii) by either party if the Closing Date does not occur within six months of the date of the Kick-Off Date, (iv) by either party upon uncured material breach by the other party or upon injunction by a governmental authority or (v) by Joffre at any time prior to the Pre-Closing Date or the Closing Date,” according to the SEC filing.
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