The saga surrounding Okada Manila and efforts by a US-based particular goal acquisition firm (SPAC) to convey the Philippine built-in resort operator public is among the extra uncommon occasions within the gaming trade in latest reminiscence. It is usually one which some consultants argue highlights the dangers of overseas targets for home blank-check corporations.
In a deal valued at $2.6 billion, Jason Ader’s 26 Capital (NASDAQ:ADER) is buying Okada Manila. When that transaction closes, the gaming inventory will commerce on the Nasdaq below the ticker “UERI” upon closure of the transaction.
The deal was slated to be finalized on the finish of June. However it suffered a setback when, in late Might, billionaire Kazuo Okada tried to bodily seize management of the Philippines built-in resort bearing his identify.
Okada believes he was unfairly ousted from the TRLEI board in 2017. He’s seen as leveraging an April ruling by the Philippines Supreme Court docket ordering the corporate to return the board to its 2017 state to have an effect on the takeover of Okada Manila.
Final month, experiences surfaced that Okada made an unauthorized $36.4 million fee to an organization managed by Okada Manila Chairman Dindo Espelata. The events in query deny the fee occurred, however a number of banks at which the gaming firm does enterprise say the on line casino operator’s property have been frozen.
Okada Manila Reminder of Worldwide SPAC Danger
Because of the controversy, completion of the SPAC merger is delayed. Thankfully, 26 Capital buyers aren’t struggling, as shares of the blank-check agency are flat over the previous month.
In reference to the ‘hostile takeover,’ the goal firm’s board filed felony prices, together with kidnapping, towards Mr. Okada,” notes Renaissance Capital, an preliminary public providing (IPO) analysis agency. “Nonetheless, it stays unsure when this problem can be resolved, and whether or not the SPAC’s shareholders would vote to approve the acquisition of an asset that the vendor doesn’t management (the vote date is now TBD).”
The analysis agency factors out that with practically 600 SPACs on the lookout for offers, and with liquidation dates fast-approaching for some, many are scoping out offers exterior the US. Clean-check corporations have two years from the date of their IPO to discover a merger accomplice, or danger liquidation.
“As extra SPACs method their termination dates, sponsors might start concentrating on corporations exterior of their geographical focus or space of experience. Nonetheless, this episode underscores the necessity for buyers and firms alike to completely vet potential merger targets, and highlights jurisdictional dangers with authorized battles overseas,” provides Renaissance Capital.
Not All Unhealthy for International Gaming SPAC Offers
Undoubtedly, there’s drama surrounding Okada Manila. However there’s additionally precedent of US SPACs merging with overseas gaming entities with out issues.
For instance, European lottery large Allwyn Leisure is merging with particular goal acquisition firm (SPAC) Cohn Robbins Holdings (NYSE:CRHC). It’s a transaction carrying an anticipated enterprise worth of $9.3 billion. Moreover, Tremendous Group (NYSE:SGHC) and Codere On-line (NASDAQ:CDRO) are examples of gaming operators primarily based exterior the US that got here public within the states through mergers with US SPACs.
“SPAC sponsors are extremely motivated to search out targets, and as competitors heats up in home markets, they’ve more and more turned overseas,” concludes Renaissance Capital. “As some SPACs have found, due diligence may be tougher when conducting transactions abroad.”