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Feud Over Empire State Building Ownership Persists

Ownership of the famed Empire State Building has recently become the subject of increasing speculation. The prized jewel of New York is currently the focal point of a custody battle involving real estate barons and an eclectic group of dissenting stakeholders. One side has initiated a campaign to persuade approximately 80 percent of the building’s stakeholders to vote in favor of going public. However, those apposed to the idea have filed a lawsuit in the State Supreme Court, claiming such a transaction violates state law.

Peter and Anthony Malkin, father and son respectively, have painstakingly orchestrated a plan that would witness stockholders associated with the Empire State Building go public with their shares. The Malkins, who currently control the minority share of the tower, have already persuaded approximately 75 percent of the building’s roughly 3,000 stakeholders to make their shares public.

The remaining five percent of the stockholders are all that stand between the father and son duo and landing the deal of a lifetime. According to the parameters of the current proposition, the $5.2 billion deal would offer the Malkins public shares in 19 properties, with the prize being the Empire State Building.

If the Malkins can persuade the remaining five percent to take their shares public, the family’s stake in Manhattan real estate will increase to an astronomical $730 million while installing Anthony as the chairman of the newly formed, Empire State Realty Trust.

According to the Malkins, going public could potentially create a company with a modern corporate structure. Investors would be allowed to buy and sell their shares with ease while enhancing the overall value.

Gaining support from the remaining five percent, however, is proving more difficult than originally anticipated. Their campaign has turned into a public blood feud. A group of dissenting stockholders, led by California businessmen Richard Edelman and Andrew S. Penson, have thoroughly entrenched themselves in opposition to the idea.

Penson filed a lawsuit in the State Supreme Court in Manhattan, suggesting that the vote should be halted because of a clause stated in the stakeholder agreement. Opponents believe that the law dictates the Malkins pay fair value for each share they are trying to acquire, as the proposed deal could serve to harm the value of investors’ shares.

“Under the agreement, once the Malkins achieve 80 percent approval, anyone who voted against it has 10 days to switch, or they could receive only $100 for their share,” The New York Times reports. “The offering values the share at about $323,000 each. Opponents argue that state law requires that the Malkins pay ‘fair value’ for all shares.”

This week will witness a critical juncture in the current battle, as the State Supreme Court will either dissolve the Malkins plan or disallow a legal change.

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