Key Takeaways:
Barry Diller's People Inc. is preparing an all-cash offer of $48.30 a share for MGM Resorts International, valuing the casino giant at more than $18 billion, the New York Times reported Monday.
"The proposal is still being finalized and could be delayed or scrapped," the Times' DealBook reported, citing people familiar with the matter. Diller and former IAC Chief Executive Joey Levin both serve on MGM's board.
People Inc. plans to acquire the 73.9% stake in MGM it does not already own. The $48.30 per share bid represents a roughly 10.6% premium over MGM's closing price on Friday and about 30% above its volume-weighted average price over the past 90 days. MGM shares surged more than 10% in premarket trading, according to Reuters data.
The deal would mark Diller's most aggressive strategic pivot since overhauling the company formerly known as IAC into People Inc. earlier this year. A successful takeover would give the digital media conglomerate ownership of one of the largest casino and resort operators on the Las Vegas Strip, with properties including the MGM Grand, Bellagio and Mandalay Bay.
People Inc., the media and technology holding company controlled by Diller, already holds a roughly 26% stake in MGM through previous investments. The company has been reshaping its portfolio under Diller's direction, and this bid represents its largest single transaction to date. The all-cash structure signals confidence in financing availability despite elevated interest rates, with the Federal Reserve holding its benchmark rate at 5.25% to 5.5% since July 2023.
The offer comes as the casino industry faces a mixed outlook. Las Vegas Strip revenue has been supported by strong convention and entertainment demand, with the city hosting major events including the Super Bowl in February 2024 and the Formula One Las Vegas Grand Prix. Regional gaming markets have shown signs of softening, while MGM's Macau operations face an uneven recovery in the world's largest gambling hub, where gross gaming revenue remains below pre-pandemic levels.
Regulatory approvals would be required for the deal, including clearance from gaming regulators in Nevada, New Jersey and other jurisdictions where MGM operates. The transaction would also face review by federal antitrust authorities. Gaming industry mergers have historically drawn scrutiny from state regulators focused on suitability and financial stability.
The bid represents a significant bet on the convergence of media, entertainment and hospitality. People Inc. owns digital brands including Dotdash Meredith, Angi Inc. and Care.com, and the acquisition would give it direct ownership of physical entertainment assets. Rival casino operators including Caesars Entertainment and Wynn Resorts could face pressure to explore strategic alternatives if the deal succeeds.
Neither MGM nor People Inc. immediately responded to requests for comment.
This article is for informational purposes only and does not constitute investment advice.
