Special purpose acquisition company (SPAC) 26 Capital recently filed suit in Delaware to complete a long-stalled merger with Philippines integrated resort Okada Manila. But analyst Howard Klein says the delay may actually push up the value of the merged entity as the Philippines gaming market continues to rally.
According to GGRAsia, in an article posted to Smartkarma, Klein said, “Our contention is that the legal delay… will put… in full force… an estimated 6.7 percent rise in revenue as recovery momentum increases toward the third quarter.
“26 Capital valuation of Okada at US$2.5 billion with a US$10 per share offer price could run up quickly as market momentum turns positive sentiment higher.” He expressed confidence that the merger in the U.S. “will move forward, regardless of the impending delay.”
The merger was first announced in October 2021. It stalled in May 2022, when associates of IR founder Kazuo Okada, removed from his company in 2017 on charges of fraud and embezzlement, seized control of the Manila property, ousted the board and occupied the premises for three months.
U.S.-based 26 Capital, which is listed on the Nasdaq, is led by Jason Ader, founder of investment management firm SpringOwl Asset Management LLC. Ader spent six years as an independent director of U.S. casino giant Las Vegas Sands Corp.
Last month, Okada Manila parent company Universal Entertainment stated that the IR’s fourth-quarter gross gaming revenue (GGR) rose 49.7 percent year-on-year, for a full-year gain of 81.5 percent. That followed the reopening of the Manila market in the first half of 2022 following Covid-19.
In October, Universal and 26 Capital announced a 12-month extension of the merger deadline from October 1, 2022, to October 1, 2023.
The U.S. lawsuit asked the court to order the timely completion of the merger. Universal said it will review the details of the suit and “properly deal with it.”
Speaking about the merger last fall. 26 Capital Chairman and CEO Jason Ader said, “I remain extremely excited about this transaction and the opportunity for our investors to participate in one of the fastest growing Asian gaming markets.”
