A major deal in the gambling industry has fallen through. Following Caesars Entertainment's approval of a $17.6 billion takeover, Barry Diller, the billionaire chairman of People Inc., announced the withdrawal of his company's proposal to purchase MGM Resorts International. Diller explained that the components of the deal did not align as anticipated.
"There are lots of ingredients that go into a proposal of this kind on its way to completion," Diller stated. He emphasized that, due to this misalignment, People Inc. decided not to pursue the acquisition of MGM at present.
The aftermath was immediate: MGM Resorts' stock plunged 14%, dropping from $38.90 on Wednesday morning to $33.50 by Thursday afternoon.
Despite the setback, Diller expressed continued interest in MGM. With People Inc. already owning around 27% of MGM Resorts through approximately 66.8 million shares, he mentioned that their belief in MGM's future remains "undimmed" and noted that they are open to future strategic transactions. Diller hinted at exploring various options moving forward.
In response, MGM Resorts International Chairman Paul Salem conveyed optimism about leading the company independently. He stated, "Our leading position in Las Vegas, our best-in-class regional properties, and BetMGM’s continued momentum highlight the value we bring to our shareholders." Salem also pointed to the international opportunities available with MGM China and MGM Osaka as avenues for increasing shareholder value.
In an unexpected turn, the Wall Street Journal reported that MGM might now be considering a move to acquire People Inc. Sources indicated that MGM could make a formal offer in the days to come. The report noted that People Inc.'s approximate 27% stake in MGM equals nearly the entire market value of Diller's company.
Diller's initial offer, made on June 1, sought to purchase all available shares of MGM Resorts not already owned by People Inc., valuing the casino operator at over $18 billion. The deal would have allowed Diller to secure a controlling stake of 50.1%, with other investors taking minority shares. He indicated that key MGM leaders, including CEO Bill Hornbuckle, would remain in their roles post-acquisition.
MGM Resorts operates several prominent properties along the Las Vegas Strip, such as the Bellagio and the MGM Grand, while also holding casinos in other states. It has a significant partnership with Entain, owning 50% of BetMGM. Diller previously remarked that he believes the market undervalues MGM’s assets and that privatization could enhance growth prospects.
During a late July earnings call, Hornbuckle shared that the MGM board had created a special committee to evaluate the acquisition proposal. He expressed confidence that the board would act in the company and shareholders’ best interests. Diller also acknowledged the MGM board for their patience and consideration during the discussions regarding the proposed acquisition.
