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US judge won't order Philippine casino merger to close

The logo of Universal Entertainment Corp. is seen at the company's headquarters in Tokyo

By Tom Hals

WILMINGTON, Del. (Reuters) -The Philippines' largest casino, owned by an affiliate of Japan's Universal Entertainment Corp, does not have to complete a SPAC merger deal with 26 Capital Acquisition Corp of the U.S., a Delaware judge ruled on Thursday.

Vice Chancellor Travis Laster said the affiliate that owned Okada Manila did not have to complete the $2.5 billion deal 2021 merger in part because 26 Capital "engaged in conduct that should not be rewarded" by ordering the deal to close.

Laster said 26 Capital could still seek damages, which he would address at a later date.

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An attorney for the casino owners said they were pleased with the ruling and an attorney for 26 Capital did not respond to a request for comment.

Delaware courts have a history of ordering parties to complete their merger deals, but Laster said those were situations where the court could oversee and enforce its order which the judge said he would not be able to do.

Laster said directing the deal to close might violate a Philippine court order. In April 2022, the Philippine Supreme Court ordered Japanese pachinko tycoon Kazuo Okada returned to the leadership of the casino owner as part of Okada's fight against his removal from Universal Entertainment.

Laster also said ordering the deal to close would reward improper conduct.

He said it was never disclosed to the casino owners that their deal adviser, Zama Capital hedge fund founder Alex Eiseman, also owned more than 60% of a 26 Capital affiliate. A low-ball deal for the casino would therefore benefit Eiseman's investment and Laster described Eiseman's work with 26 Capital as "a conspiracy to mislead Universal."

A lawyer for Eiseman did not respond to a request for comment.

If completed, the deal would have generated $275 million for the casino.

Okada Manila started operations late in 2016 and is the biggest of four multibillion-dollar casino-resorts operating in the Philippine capital.

(Reporting by Tom Hals in Wilmington, Delaware; additional reporting by Jonathan Stempel; Editing by Leslie Adler and David Gregorio)