Opponents of Empire State IPO asks appeals court to declare buyout provision illegal
Shareholders who had opposed the initial public offering of the Empire State Building in New York had asked the Supreme Court's Appellate Division in Manhattan to declare a buyout provision of the IPO plan illegal. The provision upheld by Justice O. Peter Sherwood in April, would have seen holders of ownership units get paid USD 100 for each unit if they did not agree on the planned IPO.
Led by attorney Steven Meister, the opponents of the IPO asked the appellate court to reverse Sherwood's earlier ruling. Meister said the provision forced those opposed to the plan to vote in favor of the public offer since they stand to face USD 100 buyouts on their units which were valued at hundreds of thousands of dollars. Meister said, "People were bludgeoned into changing their vote from dissenters to assenters."
The Empire State Realty Trust In, which owned the Empire State Building, went public on October 1, selling 71.5 million shares at USD 13 apiece. The sale was the end of a two-year quest by the father-and-son team of Peter and Anthony Malkin to take the iconic landmark and other properties in its portfolio public.
Some of the 2,800 legacy unit holders opposed the proposal as they would rather have a steady stream of income and ownership bragging rights of the Empire State Building. In May, Sherwood allowed the IPO to proceed by approving a USD 55 million settlement of the lawsuits filed for the trust's IPO.
Meanwhile, Attorney Thomas E.L. Dewey who represented the Malkins asked to court to affirm the previous ruling or dismiss the appeal filed by Meister's camp. Dewey said, "The IPO has occurred, the stock price is up. There's no reason to go back and revisit this issue. This was not some sort of freeze out transaction. All the investors were treated equally."