Playtika's young founders win big on casino acquisition
The online gaming company's investors include former 888 CEO Gigi Levy and real estate developer Igal Ahouvi.
Today's acquisition of 51% of social games developer Playtika Ltd. at a company value of $80-90 million by US resorts and casino operator Harrah's, a unit of Caesar's Entertainment Corporation, is astonishing by almost every measure. It is the largest acquisition of an Israeli online gaming company, and the first time that a large US gaming company has bet tens of millions of dollars on an Israeli online gaming start-up that has not yet proven its worth.
Moreover, the winners in the Playtika deal are its founders - young men, the family of one of whom is well known. Uri Shahak is the son of former IDF chief of staff Lt.-Gen. Amnon Lipkin-Shahak. Uri Shahak declined to respond to questions by "Globes" about the deal, because he was bound to confidentiality by Harrah's.
Uri Shahak co-founded Playtika with Robert Antokol, who previously founded Cmate SA, which he sold to Oberon Media Inc. six years ago. Shahak previously served as senior games manager at 888 Holding plc (LSE:888). Antokol is Playteka CEO and Shahak is its COO.
Sources inform ''Globes'' that Shahak brought to Playtika many investors from the online gaming industry, including former 888 CEO Gigi Levy and 888 investor Ofer Lezovsky, and former Empire Online VP marketing Avner Yasur, as well as real estate developer Igal Ahouvi, Yariv Gilat, Dafna Weiss, and Domaine du Castel winery founder Eli Ben-Zaken.
Playtika reportedly raised about $1 million, and Uri Shahak will reportedly make a few million dollars on the company's sale.
Another reason that makes Playtika's exit unusual is the company's business results. The company was incorporated a year ago, and began marketing its products six months later. Sources inform ''Globes'' that the company's monthly turnover is about $100,000, or $1.2 million a year, and it does not have a positive cash flow from operations.
However, Playtika did not invest in advertising or marketing, but since its new owner has deep pockets, and given that similar software companies often succeed quite quickly, Playtika has a good chance of generating cash flow soon, so long as the growth in its business continues apace.
Playtika does not call itself an online gambling company, but an online games company that develops games for use on social websites, such as Facebook and its Russian counterpart Vkontakte. The company has grown rapidly thanks the burgeoning popularity of social networks.
Published by Globes [online], Israel business news - www.globes-online.com - on May 18, 2011
© Copyright of Globes Publisher Itonut (1983) Ltd. 2011
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