Japan’s Universal Entertainment Corp said Friday it expects 26 Capital Acquisition Corp to lodge an appeal after a US court ruled against forcing a merger between the US-based SPAC and the Universal subsidiaries that operate Philippines integrated resort Okada Manila.
As reported by IAG, the Delaware Court of Chancery determined last week that 26 Capital, which launched legal action in February to push for the planned merger to close, had “engaged in conduct that should not be rewarded” and that completion of the merger would not be required after the Okada Manila entities terminated the deal in June.
In a Friday filing, Universal noted that the court had reserved judgment on a finding of any potential breach of contract until a damages trial is held, but also said there would “likely be an appeal” of the decision. Universal added that it would “continue to assert the legitimacy of our claims in the lawsuit” in any damages hearing or appeal.
According to Universal, the primary reasons for the court ruling in its favor in the first instance included the “complexity of completing the [merger] and supervising the subsidiaries’ obligations”, the challenges of enforcing the order of specific performance against a Japanese company group operating a casino in the Philippines, the potential for any order issued in the US violating a previous status quo ante order issued in the Philippines in May 2022, and the “inequitable conduct” of 26 Capital and an associated company, Zama Capital, which was as main advisor to the merger.
The proposed merger was first announced in October 2021 and was seen as an efficient means for Okada Manila to list on the NASDAQ – a plan that now seems to have been sidelined for the foreseeable future.
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