Barry Diller’s People Inc. has made an all-cash offer to buy the MGM Resorts shares it does not already own. The proposal values the casino operator at more than $18bn including debt. People, formerly known as IAC, already owns 26.1% of MGM Resorts. The company is offering $48.30 per share in cash for the remaining stock.
Offer would make MGM private
The proposal would take MGM Resorts private if accepted. People would control just over 50.1% of MGM’s equity, while other investors would hold minority stakes.
MGM confirmed it received the offer and is reviewing it with advisers. Diller sits on MGM’s board, but is expected to step back from board discussions on the proposal because of his role at People.
The offer represents a 10.6% premium to MGM’s previous closing price. MGM shares rose sharply after the proposal became public, trading above the offer price as investors weighed whether a higher bid could follow.
Diller sees value in MGM assets
Diller has been building his MGM position since 2020, when travel restrictions and casino closures pushed down gaming stocks. People is now MGM’s largest shareholder. The offer is built around MGM’s casino, hotel and entertainment assets. MGM operates major Las Vegas Strip properties including Bellagio, MGM Grand, Mandalay Bay, Aria and The Cosmopolitan.
MGM also has regional U.S. casinos and a major Macau presence through MGM China. Its digital business includes BetMGM, the online betting and iGaming joint venture with Entain.
Casino deal activity increases
The MGM proposal comes soon after Fertitta Entertainment agreed a $17.6bn deal to buy Caesars Entertainment. Together, the two deals show renewed interest in large casino operators after a difficult period for some gaming stocks.
Casino companies have been dealing with slower Las Vegas travel indicators, higher costs and investor questions over online betting competition. At the same time, large operators still hold valuable land-based assets and national loyalty databases.
MGM review will involve independent directors
MGM’s review is expected to involve directors not connected to People or Diller. That process is common when a major shareholder makes a takeover proposal for the rest of a company. The structure helps address conflicts of interest while the board considers price, financing and regulatory risk. Any final agreement would still need formal approvals before the deal could close.
