MGM Resorts’ stock experienced a rise in pre-market trading following reports that the company is still in takeover discussions with media billionaire Barry Diller.
Diller, who is the CEO of People Inc and the founder of Fox Broadcasting Company, initially proposed an $18 billion bid in early June aimed at increasing his firm's stake in MGM Resorts to 51%. Recent updates from unnamed sources indicate that negotiations between Diller and MGM are ongoing, as reported by the Wall Street Journal.
On July 13, MGM Resorts' share prices climbed 2.5% before the market opened and then increased another 1.3% once trading commenced, reflecting trader optimism regarding the potential deal.
Diller intends to take MGM Resorts private, highlighting in a communication to MGM shareholders that enhancing the company's revenue would pose challenges if it remains a public entity.
The ongoing negotiations have also seen MGM create a special board committee to facilitate discussions. However, the price remains a contentious issue. Diller's offer of $48.30 per share values MGM at approximately $12.4 billion, but MGM officials reportedly believe this figure falls short of their expectations. Currently, MGM shares are trading at about $47.50.
Despite not responding officially to Diller’s offer, sources claim that discussions intensified in July. MGM has engaged financial advisers to evaluate the takeover proposal, while Diller is in talks with financial institutions, including JPMorgan Chase, to explore funding options for the acquisition.
Diller has expressed assurance regarding People Inc’s capacity to secure financing, noting that cash resources could partially fund the deal and mentioning positive early discussions with prospective investors and banks.
MGM Resorts is well-known for its substantial presence on the Las Vegas Strip, controlling around 40% of the area. Diller referred to these holdings as a significant asset, emphasizing Las Vegas as a central hub for entertainment.
Despite challenges anticipated for Las Vegas casinos, MGM's businesses in China and digital sectors are seeing growth. Hotel occupancy rates at MGM’s properties in Macao are now at 94%, with increasing tourism numbers in the region. In the first quarter of the financial year, MGM Cotai generated over $676 million in revenue, while MGM Macau reported earnings of $434 million.
Las Vegas is facing upcoming transformations, notably with Fertitta Entertainment set to acquire Caesars in a deal valued at $17.9 billion. Fertitta, who leads Fertitta Entertainment, is also recognized as the owner of the Golden Nugget Casinos and the Houston Rockets NBA team.
