Genting Malaysia to take full ownership of Empire Resorts in US$80.7 million deal 

Genting Malaysia Berhad has announced plans to acquire the remaining 10% economic interest in New York-based Empire Resorts Limited that it does not already own, through a transaction valued at approximately US$80.7 million. 

The deal includes a US$41 million cash consideration and the assumption of a US$39.7 million intercompany loan from Empire to the Lim family’s investment vehicle, Kien Huat Realty III Ltd. Although the acquisition is still subject to regulatory approval, it is expected to be completed by the second quarter of FY2025.

The move, detailed in a filing to Bursa Malaysia, will see Genting Malaysia take full control of Empire Resorts, which operates Resorts World Catskills, Resorts World Hudson Valley, and the online sportsbook platform Resorts World Bet. 

The stake is currently held by the family trust of Genting Group Chairman and CEO Lim Kok Thay, who also serves as Deputy Chairman and CEO of Genting Malaysia. KH currently owns 51% of Empire’s common stock, with Genting Malaysia holding the remaining 49% and 100% of the convertible preferred stock.

Empire Resorts has long been a loss-making entity despite multiple rounds of capital infusion. Since acquiring its stake in 2019 for US$128 million, Genting Malaysia has injected more than US$720 million into the business, yet profitability remains elusive. 

Nomura analysts Tushar Mohata and Alpa Aggarwal described the latest transaction as negative, citing the absence of a clear turnaround plan and warning that Genting Malaysia would now have to consolidate Empire’s entire financial performance, potentially deepening reported losses.

Following the announcement, Nomura downgraded Genting Malaysia’s stock from “Buy” to “Reduce,” citing concerns over increased interest, depreciation, and associate losses. The downgrade also reflects weaker-than-expected post-COVID recovery and structural cost challenges, with recent capital expenditures not yet yielding anticipated returns. 

This comes after the company reported a disappointing fourth quarter in 2024, prompting a dividend cut and sustained de-rating of its share price.

Maybank Investment Bank, in a separate note, echoed concerns about the deal’s value implications, calling it the latest in a series of related party transactions that have eroded shareholder value. Similarly, Hong Leong Investment Bank described the acquisition price as excessive, calculating that the deal values Empire at an EV/EBITDA multiple of 72.7, far above the industry average of around 10 times for US-listed casino operators.

While the transaction will give Genting Malaysia full control over the Resorts World-branded operations in New York, HLIB warned of financial strain. It projects an increase in total borrowings by RM1.3 billion ($310 million), raising the group’s gearing ratio to 1.15 and adding up to RM70 million ($16.54 million) in annual interest costs by FY2026–2027. 

The firm also anticipates that Genting Malaysia’s share of Empire-related losses could widen by RM23 million ($5.43 million) in FY2025, potentially denting earnings by 3.5% over the next three years.

PublicInvest Research remained bearish, citing persistent losses and market cannibalization following the launch of Resorts World Hudson Valley in late 2022. The research firm noted that Genting Malaysia has been absorbing RM160 million ($37.80 million) to RM280 million ($66.15 million) in annual losses linked to Empire between FY2020 and FY2024. 

Downgrading Genting Malaysia to “Trading Sell,” it lowered its target price to RM1.66 from RM2.53 ($0.39 - $0.60), citing both the earnings impact and ongoing governance concerns.