Tencent in talks to acquire Playtika's SuperPlay in deal worth up to $1.5 billion

Three months after announcing that it was exploring strategic alternatives for its business, Playtika is in talks to sell its most valuable asset. Calcalist has learned that the mobile gaming company is negotiating the sale of Israeli game developer SuperPlay to Chinese giant Tencent in a deal valuing the company at between $1 billion and $1.5 billion. The potential transaction reflects an unusual paradox: SuperPlay's rapid success has become a financial burden for its parent company. Playtika acquired SuperPlay in November 2024 for $690 million in cash from founders Eyal Netzer and Gilad Almog, both former Playtika executives. The deal also included an earnout worth up to $1.25 billion, tied to SuperPlay's financial performance between 2025 and 2027. Under the agreement, Playtika reassesses the company's performance, primarily revenue growth, at the end of each year and adjusts the additional payments owed to the founders accordingly. As SuperPlay continues to outperform expectations, Playtika's financial obligation continues to grow. Growth has significantly exceeded the assumptions underlying the original acquisition. SuperPlay generated $573 million in revenue in 2025, roughly 67% above the baseline target used to calculate the earnout. As a result, Playtika increased its estimate of future contingent payments to the founders to $734 million in its 2025 annual report. In its first-quarter 2026 results, that estimate was raised again to $829 million. Industry sources believe the liability could continue to increase if SuperPlay maintains its current growth trajectory. One of the company's biggest growth drivers has been a Disney-branded Solitaire game, which industry estimates say is generating annual revenue of about $300 million. According to industry estimates, Tencent's proposed purchase price would not include the future earnout obligations. Instead, the Chinese company would assume responsibility for those payments, relieving Playtika of a liability that could ultimately reach hundreds of millions of dollars while significantly strengthening its balance sheet. The prospective sale would represent a dramatic reversal of strategy. SuperPlay's acquisition marked Playtika's attempt to diversify beyond its traditional social casino business and expand into the faster-growing casual gaming market, which offers a broader customer base and stronger long-term growth prospects. Less than two years later, the company could be preparing to part with what had become the centerpiece of that strategy. The move is also driven by Playtika's balance sheet. The company faces approximately $2.3 billion of debt maturities in 2028 and 2029. Much of that debt was raised during the era of near-zero interest rates, and refinancing it is expected to come at substantially higher borrowing costs, potentially increasing financing expenses by tens of millions of dollars each quarter. From an accounting perspective, the SuperPlay acquisition has also weighed on Playtika's financial statements. While SuperPlay's operating cash flow, including its $573 million in 2025 revenue, is recorded as operating cash flow, payments under the earnout are classified as investing cash flows. In addition, any increase in the estimated liability is recognized as an expense in the income statement, reducing reported net income even though it is excluded from adjusted EBITDA. As a result, Playtika reported a net loss of approximately $309 million in the fourth quarter of 2025, driven primarily by the accounting revaluation of its contingent acquisition liabilities. The company has also warned investors that its future cash flow and liquidity may not be sufficient to fully fund the earnout payments, particularly if it is unable to refinance its primary credit facility before 2027. Those pressures prompted Playtika to suspend its dividend this year, saying it wanted to preserve financial flexibility to meet future obligations and pursue strategic opportunities. At the same time, Playtika's legacy business continues to weaken. The company no longer discloses revenue from Slotomania, for years its flagship title and largest profit contributor. Revenue from Bingo Blitz fell 3% sequentially and 5.5% year-over-year in the first quarter of 2026 to $154 million. Despite those headwinds, Playtika, led by founder and CEO Robert Antokol, reported first-quarter revenue of $745 million, up 10% from a year earlier, and raised its full-year 2026 revenue guidance to $2.75 billion-$2.85 billion, up from its previous forecast of $2.7 billion-$2.8 billion. It also increased the lower end of its adjusted EBITDA guidance to $750 million-$770 million, compared with a previous range of $730 million-$770 million. Even so, investor confidence remains weak. Playtika's shares have lost roughly two-thirds of their value over the past three years. The stock is up about 1.5% since the beginning of this year, leaving the company with a market capitalization of approximately $1.5 billion, around 80% below its peak valuation. The company is controlled by Alpha Frontier Limited, which owns approximately 52% of the shares. Businessman On Chau holds another 21%, while Antokol owns 4.8%. In April, Playtika announced that it was evaluating "strategic alternatives" for the company. Before that announcement, management held discussions with potential partners and investors in Asia and the Gulf as it sought solutions to its expected funding needs. Playtika's business model is built around free-to-play mobile games with relatively short life cycles, and the company has struggled in recent years to expand its user base, increasing pressure to pursue strategic transactions. For Tencent, the acquisition would further strengthen its position as the world's largest gaming company by revenue. Founded in Shenzhen in 1998 by Pony Ma and his partners, Tencent built its empire around QQ before launching WeChat in 2011, now one of China's dominant digital platforms with more than 1.4 billion monthly active users. Beyond gaming, Tencent operates major businesses in digital advertising, fintech, cloud computing and artificial intelligence. It owns Riot Games outright and holds significant stakes in Epic Games, Supercell and Ubisoft. The company has also built one of the world's largest technology investment portfolios, with past investments including Tesla and Spotify, although it has reduced some holdings in recent years. Like Alibaba and ByteDance, Tencent has faced tighter regulatory scrutiny in China, including restrictions on gaming, stronger competition oversight and tougher data-security ru