Genting Malaysia shares fell by more than 11% on Wednesday after news broke of the company’s proposed US$128.6 million purchase of a stake in Empire Resorts, operator of New York’s Resorts World Catskills.
As previously reported by Inside Asian Gaming, Genting Malaysia’s wholly-owned subsidiary Genting (USA) Ltd is set to acquire 13.2 million shares in Empire Resorts from Kien Huat Realty III Ltd – the family trust of Genting Chairman Lim Kok Thay and current 86% equity owner of Empire Resorts. Genting (USA) Ltd and Kien Huat will then look to jointly acquire by merger all remaining shares in Empire with Genting to hold a 49% stake and Kien Huat 51%.
The market was quick to react on Wednesday with Genting Malaysia shares plummeting 11.91% to MYR3.18 – marking the day’s biggest decline – and Genting Berhad shares also falling by more than 7% to MYR6.18.
However, analysts at RHB Research weren’t so critical, stating that the investment could prove a more efficient method of expansion than developing a similar project to Resorts World Catskills from scratch.
“While the acquisitions are not value accretive and may negatively affect our earnings forecasts, the acquisition price appears to be fair compared to the potential GGR of over US$200 million and US$1 billion cost to construct Resorts World Catskills,” it said.
Empire Resorts, which opened Resorts World Catskills in early 2018, had previously licensed the Resorts World name from Genting Group.
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