Barry Diller’s People Inc. submitted a non-binding proposal to MGM Resorts International’s board on June 1 to acquire the roughly 74% of the company it doesn’t already own, in a deal that would value the casino operator at more than $18 billion including debt.
People Inc., the holding company formerly known as IAC that owns brands including People magazine, Travel & Leisure and Food & Wine, has held a 26.1% stake in MGM since beginning to invest in the company nearly six years ago. Under the proposal, it would pay $48.30 per share in cash for the remaining shares, a roughly 10.6% premium to MGM’s closing price the previous Friday and more than a 30% premium to the stock’s 90-day volume-weighted average price.
“We began investing in MGM nearly six years ago because we believed it represented a rare kind of business: one with real world assets that AI cannot easily replicate or disintermediate and exceptional digital growth opportunities,” Diller wrote in a letter to MGM’s board. “We continue to believe the market materially undervalues the power and durability of MGM’s assets.”
In the letter, addressed to MGM Chairman Paul Salem and Chief Executive William Hornbuckle, Diller said the deal would be financed through cash on hand along with additional debt and equity commitments, and that MGM’s current management team would remain in place. Diller, who already sits on MGM’s board, said he would recuse himself from any board deliberations on the proposal and committed that People would not sell its existing stake or support any rival deal that would dilute its position.
MGM shares jumped roughly 14% to 16% on the news, closing above the offer price itself — a sign, analysts said, that investors expect the board to seek better terms. Stifel’s Steven Wieczynski said the offer undervalues the company and that the board has room to push back.
The proposal landed just days after Fertitta Entertainment agreed to acquire Caesars Entertainment for $17.6 billion, intensifying speculation about further consolidation across the U.S. casino industry. Analysts at BNP Paribas and Truist both described the Diller bid as a broadly positive signal for the sector.
MGM, which owns the Bellagio, MGM Grand, Aria and Mandalay Bay along with a substantial footprint on the Las Vegas Strip, reported first-quarter revenue growth of more than 4%, with Las Vegas posting its first year-over-year revenue gain in six quarters. Its BetMGM joint venture, one of the largest online sportsbooks in the U.S., grew North American revenue 6% and adjusted EBITDA 11% during the quarter, while MGM Digital revenue jumped 43%. Adjusted earnings, however, fell 29% to $0.49 per share, and the company’s debt-to-equity ratio stood at 1.93.
MGM’s board, working with financial and legal advisers, said it would review the offer to determine the best course of action for shareholders. The company has not set a timeline for completing that review.