This week, Barry Diller's People Inc withdrew its $18 billion bid to acquire the 73% of MGM Resorts shares it does not already own, leading to speculation that MGM might now consider a bid for People Inc. The Wall Street Journal reported late Thursday on this possible shift, citing sources familiar with the developments. Following the rescind of the offer, People Inc's shares have increased by 10%, while MGM's shares have dropped nearly 15% during the same period.
Diller's involvement with MGM began in 2020, and his current 27% stake in MGM is thought to align with People’s market capitalization of around $3 billion, according to the WSJ. In a statement that accompanied the announcement regarding the cancellation of MGM takeover talks, Diller mentioned that the deal was not coming together as hoped but expressed “total confidence” in MGM, noting that People Inc is still “open to and interested in the possibility of a strategic transaction with MGM Resorts.”
Neither People Inc nor MGM offered statements to Reuters or iGB when requested for further comment.
Diller had shown interest in acquiring MGM for its tangible assets as the business landscape increasingly shifts towards AI and technology. For People Inc, acquiring MGM would have been a strategy to diversify its portfolio and mitigate potential adverse effects on its media and publishing operations.
It remains unclear what benefits MGM would derive from acquiring People Inc, which publishes popular brands such as People magazine and Food & Wine. MGM's stock is down a quarter in the past month alone.
In response to Diller's withdrawal from negotiations, MGM Chairman Paul Salem expressed no intention to pursue an acquisition, stating instead that the firm has a “clear path to increasing shareholder value” through its existing strategies.
Analysts maintain a positive outlook on MGM, believing that challenges surrounding borrowing costs and regulatory approvals were likely factors in derailing the deal rather than any fundamental issues with MGM itself. Macquarie analyst Chad Beynon indicated that MGM's enterprise value of roughly $5.9 billion represents a significant discount, while Barry Jonas from Truist continues to support a “Buy” rating with a price target of $55, substantially higher than its current trading price of about $32.50.
