(AsiaGameHub) – In a significant development, People Inc. has tabled an offer valued at approximately $18 billion aiming to gain full control of MGM Resorts International through an outright acquisition of the casino operator.
The firm, previously called IAC and led by Barry Diller, stated on Monday, June 1, that it has put forward a plan to purchase all remaining MGM shares it does not currently hold for $48.30 per share in cash.
Currently, People Inc. possesses a 26.1% interest in MGM, establishing it as the largest shareholder.
“The Market Undervalues the Power of MGM”
This proposal follows closely on the heels of an agreement by billionaire Tilman Fertitta’s companies to buy Caesars Entertainment, sparking talk that a fresh consolidation trend may be taking shape in the gaming sector.
Per the New York Times, it remains “unclear whether a bid by People Inc. for MGM Resorts would put the casino operator in play,” potentially drawing other interested parties. Nonetheless, the existing shareholding “could serve as a substantial blocking position against rivals.”
In a statement released with the offer, Diller said his belief in MGM has only strengthened since People Inc. initially invested in the company almost six years ago.
He further characterized MGM as an enterprise with prized physical properties alongside considerable potential for digital expansion, which he feels the market still fails to properly value.
“We continue to believe the market materially undervalues the power and durability of MGM’s assets,” Diller stated.
If the proposal proceeds, MGM would transition into a privately held company under People Inc.’s control, with the current management team expected to stay mostly intact.
Funding for the transaction would come from a mix of on-hand cash, borrowed money, and further equity pledges from investors.
Renewed Interest in Mergers
Analysts mostly reacted favorably to the news, yet several doubted MGM’s board would accept the offered price.
David Katz from Jefferies remarked that the bid should be considered a positive signal for MGM and other gaming firms, especially after the Caesars deal revived focus on mergers within the industry.
He added, however, that MGM’s leadership has consistently maintained the company’s shares are worth substantially more than their present trading price.
Other commentators observed that MGM’s stake in the BetMGM sports betting operation might add complexity to any possible deal.
The eventual configuration of the business is likely to be a key topic should talks progress.
MGM acknowledged receipt of the proposal, stating its board, alongside financial and legal advisors, will evaluate the offer thoroughly to decide the best course for shareholders.
For the time being, shareholders are not required to do anything. MGM also emphasized that there is no certainty the discussions will result in a definitive agreement.
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