aesars Entertainment’s interactive unit is working with investment bank Raine Group LLC to evaluate unsolicited bids that have exceeded $4 billion, people familiar with the matter said.
Suitors include financial firms and gaming, media and entertainment companies, one of the people said.
There is no formal sales process, and it is possible there won’t be any deal, Mitch Garber, who runs the online-games businesses, said in an interview. “We want to hear what people have to say, for sure,” he said.
Bondholders have criticized moves made before the filing that put CIE and other valuable assets out of their reach
Caesars Interactive Entertainment, or CIE as the unit is known, is one of the largest online, mobile- and social-gaming companies, with annual sales of nearly $800 million. It notched year-over-year revenue growth of 28.8% in the first quarter.
That could make a sale another point of contention between Caesars Entertainment and creditors of the unit in bankruptcy proceedings, which operates a collection of casinos and filed for creditor protection last year.
Bondholders have criticized moves made before the filing that put CIE and other valuable assets out of their reach. They have also attacked CIE’s acquisition of World Series of Poker trademark rights. A court-appointed examiner in the bankruptcy case said there is a strong chance creditors could be awarded damages in litigation over World Series of Poker.
Caesars Entertainment has denied that any of its prebankruptcy transactions was improper. Nonetheless, Caesar’s Entertainment has warned that litigation by some of the bondholders of the unit that is in bankruptcy proceedings could force it, too, to file for chapter 11 protection.
That interactive unit was started in 2009 to operate the World Series of Poker, a popular tournament held in Las Vegas every year, and online gambling operations.
Last year, the interactive division had record sales of $766.5 million, up about 30%. Its growth far outpaces that of any other division of the company
In 2011, Caesars Entertainment spent around $100 million to buy Playtika, owner of the non-gambling, casino-style mobile game Slotomania, which along with other casino-style games now makes up more than 97% of the interactive unit’s revenue. The games offer no chance to win money, but around 4% of the business’s 22 million unique users a month pay a small amount each to progress through the games and unlock new game levels. That provides significant revenue, said Mr. Garber.
Last year, the interactive division had record sales of $766.5 million, up about 30%. Its growth far outpaces that of any other division of the company.
The sales inquiries have centered on the interactive unit’s mobile-games business, not its World Series of Poker and Internet-gambling operations, one of the people said.
The relationship among Caesars Entertainment and its affiliates is complex. Caesars Entertainment spun off the interactive business and other assets in 2013 into a unit called Caesars Growth Partners, which is controlled by Caesars Acquisition Co., a separate company set up to facilitate those transactions.
Caesars Entertainment owns a majority of Caesars Growth Partners, which in turn owns Ceasars Interactive. But Caesars Entertainment doesn’t have voting control over the interactive company.
Caesars Acquisition’s stock price rose 9% after hours on The Wall Street Journal’s report of the possible sale. It had closed at $8.71, down 3.3%, in regular trading. Caesars Entertainment, owned by private-equity firms Apollo Global Management LLC and TPG, was little changed after hours.
At the time of the spinoff, investors and analysts believed the future of Internet gambling, illegal in most of the U.S., was bright. But they have grown more pessimistic, as the federal government and most states haven’t moved to allow it.
Nonetheless, the performance of the social- and mobile-games products has been far better than expected.
Traditional videogame companies such as Nintendo Co., Sony Corp. and Activision Blizzard Inc. are bulking up their mobile offerings after years of worrying such offerings would cannibalize their other products.
In March, Nintendo introduced its first smartphone game, called Miitomo, in Japan. Also in March, Sony said it would start making games for smartphones. Earlier this year, Activision Blizzard bought “Candy Crush” maker King Digital Entertainment PLC in a roughly $6 billion deal.