This article first appeared in The Edge Financial Daily on November 15, 2019

KUALA LUMPUR: Genting Malaysia Bhd announced yesterday that Empire Resorts Inc’s stockholders had approved Genting Malaysia-Kien Huat Realty III Ltd’s (GM-KH) joint proposal to acquire by merging the outstanding shares held by shareholders of Empire that are unaffiliated with GM-KH at US$9.74 (RM40.52) each.

In a statement to Bursa Malaysia yesterday, Genting Malaysia said the US-listed casino operator’s stockholders approved the proposed merger at a special meeting on Wednesday.

“As part of the proposed merger and in accordance with the merger agreement, qualified shareholders of Empire will be entitled to receive in cash from [the GM-KH] joint-venture (JV) [company] US$9.74 for each share of common stock in Empire [they] held,” Genting Malaysia said.

The approval for the deal came despite a lawsuit filed by a minority Empire shareholder against Genting Malaysia, Kien Huat, Empire and its board members, accusing them of steering the company towards a privatisation that goes against minority shareholders’ interests.

Kien Huat, an investment vehicle controlled by Tan Sri Lim Kok Thay, and Genting Malaysia collectively control an 86% stake in Empire via their JV company, Hercules Topco LLC. Lim also owns a 49.45% indirect stake in Genting Malaysia.

Besides alleging that Empire’s board had breached its fiduciary duties in connection with the negotiation and approval of the merger deal, the minority shareholder — David Mullen from New Jersey — also claimed that the company, together with the other accused parties, had aided and abetted the board in the matter.

According to news reports, the suit also claimed that Lim and Genting Malaysia scared off third-party offers by publicly declaring, via Empire’ financial filings, that they would not entertain buyout proposals they deemed unsuitable for Empire.

In his suit, Mullen had sought to stop the merger, or if the deal was consummated, to rescind it or to recover damages, according to Genting Malaysia’s previous stock exchange filing.

“The defendants deny all such allegations, we believe the merger litigation is without merit, and plan to defend against all claims stated therein,” the Oct 17 filing read.

Following the latest announcement, Genting Malaysia shares settled seven sen or 2.22% higher at RM3.22 yesterday, with a market capitalisation of RM18.26 billion, after 6.76 million shares were crossed. Nasdaq-listed Empire settled at US$9.73 on Wednesday.