US judge won't order Philippine casino merger to close (updated)

26 Capital Acquisition

07/09/2023 22:18

(Updates with details from ruling and background, paragraphs
4-11)
    By Tom Hals
       WILMINGTON, Del., Sept 7 (Reuters) - 
    The Philippines' largest casino, owned by an affiliate of
Japan's Universal Entertainment Corp  6425.T , does not have to
complete a SPAC merger deal with 26 Capital Acquisition Corp
 ADER.O  of the U.S., a Delaware judge ruled on Thursday.
    Vice Chancellor Travis Laster said the affiliate that owned
Okada Manila did not have to complete the $2.5 billion deal 2021
merger in part because 26 Capital "engaged in conduct that
should not be rewarded" by ordering the deal to close. 
    Laster said 26 Capital could still seek damages, which he
would address at a later date.
    An attorney for the casino owners said they were pleased
with the ruling and an attorney for 26 Capital did not respond
to a request for comment.
    Delaware courts have a history of ordering parties to
complete their merger deals, but Laster said those were
situations where the court could oversee and enforce its order
which the judge said he would not be able to do.
        Laster said directing the deal to close might violate a
Philippine court order. In April 2022, the Philippine Supreme
Court ordered Japanese pachinko tycoon Kazuo Okada returned to
the leadership of the casino owner as part of Okada's fight
against his removal from Universal Entertainment.
  
        Laster also said ordering the deal to close would reward
improper conduct.
  
        He said it was never disclosed to the casino owners that
their deal adviser, Zama Capital hedge fund founder Alex
Eiseman, also owned more than 60% of a 26 Capital affiliate. A
low-ball deal for the casino would therefore benefit Eiseman's
investment and Laster described Eiseman's work with 26 Capital
as "a conspiracy to mislead Universal."
  
        A lawyer for Eiseman did not respond to a request for
comment.
  
        If completed, the deal would have generated $275 million
for the casino.
  
        Okada Manila started operations late in 2016 and is the
biggest of four multibillion-dollar casino-resorts operating in
the Philippine capital.
  

 (Reporting by Tom Hals in Wilmington, Delaware; additional
reporting by Jonathan Stempel; Editing by Leslie Adler and David
Gregorio)
 ((thomas.hals@thomsonreuters.com; +1 610 544 2712; Reuters
Messaging: thomas.hals.thomsonreuters.com@reuters.net))