Empire Resorts' remaining shares will be acquired by Genting Malaysia.
Fresh, Revamped Take
Hey there! Let's talk business and casinos, shall we? Genting Malaysia's sketchy move: acquiring the remaining 10% stake in Empire Resorts they don't already own, all for a cool $80.7 million. Here's the lowdown on this risky bet!
Genting Malaysia already holds 49% of Empire's common stock and 100% of its convertible preferred stock. The remaining 51% is owned by Kien Huat Realty III Ltd, the Lim family's investment arm. If all goes as planned, Genting Malaysia is about to take full control—owning Resorts World Catskills, Hudson Valley, Resorts World Bet, and their online sportsbook platform.
But here's the catch: analysts warn that the acquisition might lead to a rise in losses and debt burden for Genting Malaysia. The move has been labeled negative by Nomura, who pointed out that Empire has never turned a profit despite over $720 million in capital injections. If Genting Malaysia consolidates Empire's financial results, overall losses might grow.
The skepticism doesn't stop there. Nomura, Maybank Investment Bank, and Hong Leong Investment Bank all raised red flags about the acquisition's lofty price tag. HLIB, in particular, estimated that Empire's value falls well above the U.S. casino industry average, causing potential financial strain.
But what about Genting Malaysia's financial performance? It's been a rocky road lately. A weak Q4 2024 performance led to a dividend cut and a further drop in share value. Nomura even downgraded the stock from "Buy" to "Reduce," indicating that the future is far from sunny for Genting Malaysia.
So, what can we take away from this cautionary casino tale? Potential increased losses, higher debt, and added financial pressure are the names of the game if Genting Malaysia pushes through with the Empire Resorts acquisition. But hey, roll the dice and see where luck takes them, right? Risk takers unite!
Nifty Facts:
- The acquisition would solidify Genting Malaysia's control over Empire's assets, including popular casinos and their online sportsbook platform.
- Despite over $720 million in capital injections, Empire Resorts has never turned a profit, causing analysts concern about Genting Malaysia's financial future.
- HLIB estimates that Empire's value falls well above the U.S. casino industry average, adding pressure on Genting Malaysia's finances.
- This risky bet could potentially strain Genting Malaysia's finances, as analysts warn that the acquisition of the remaining 10% stake in Empire Resorts might lead to a rise in losses and debt burden for Genting Malaysia.
- With the acquisition of Empire Resorts, Genting Malaysia may face additional financial pressure, as their overall losses might grow if they consolidate Empire's financial results, as shown in the concern raised by analysts about the acquisition's lofty price tag.
