MGM Resorts could be considering a bid for People Inc following the recent withdrawal of Barry Diller's $18 billion acquisition offer for MGM's remaining shares, according to reports. The Wall Street Journal highlighted this potential shift last Thursday, citing information from sources familiar with the situation. This week has seen a favorable shift for People Inc, with its stock rising by 10%, while MGM's shares have dropped nearly 15%.
Diller first invested in MGM in 2020 and currently owns a 27% stake, which aligns in value with People’s market capitalization of approximately $3 billion, as noted by the Journal. When announcing the end of the takeover discussions, Diller remarked that the deal's "ingredients" weren't aligning as hoped. However, he expressed "total confidence" in MGM and mentioned that People Inc remained open to a strategic opportunity with MGM Resorts.
Neither People nor MGM provided comments to Reuters or iGB, respectively.
Diller's interest in MGM's assets had been driven by a desire to diversify his company’s portfolio amid a rapidly evolving business landscape influenced by AI and technology, which could impact his media and publishing ventures. In contrast, it remains unclear how acquiring People, which publishes titles like People magazine and Food & Wine, would benefit MGM strategically, especially as the casino operator has seen a quarter of its stock value vanish in the past month.
MGM Chairman Paul Salem did not hint at pursuing a deal after Diller's remarks, stating that the company had a "clear path to increasing shareholder value" through existing strategies. Analysts continue to be optimistic about MGM’s prospects. Many attribute the deal’s collapse not to problems with MGM, but rather to challenges related to borrowing costs and regulatory approvals. Macquarie analyst Chad Beynon recently described MGM’s implied enterprise value of approximately $5.9 billion as "a striking discount," while Barry Jonas of Truist maintained a "Buy" rating with a target price of $55, significantly higher than its current value of about $32.50.
