Genting Malaysia is being sued by a minority shareholder of Empire Resorts who claims that the operator is undervaluing the U.S. company.
Genting is expected to pay $128.6 million for a 46 percent stake of Empire, which operates the Resorts World Catskills.
“The dissenting shareholder opines that Empire Resorts is undervalued but did not state the amount of damages he is seeking,” Maybank analyst Samuel Yin Shao Yang said in a note. “Curious, most analysts believe Empire Resorts is overvalued at the offer price of $9.74/Empire Resorts share.”
The lawsuit is asking for the privatization to be stops so that Empire can reassess its value and seek alternative offers.
“We hope GENM will not have to offer a higher price for Empire Resorts,” Yang said.
Genting announced plans to privatize the currently-loss-making Empire in August, triggering a 12 percent plunge in its share price on concern that turning around the company will weigh on its earnings.
Genting said the acquisition will be made by its wholly-owned subsidiary Genting (USA), which will acquire 13.2 million shares in Empire Resorts Inc from its single largest shareholder, Kien Huat Realty III (KH).