Barry Diller, through his company People Inc., has put forth a proposal to purchase the remaining 73.9% of MGM Resorts International that his entity does not yet own. The offer is for $48.30 per share, which values MGM Resorts, including its debt, at nearly $18.8 billion. This bid represents a 10.6% premium over MGM Resorts' closing price on the Friday prior to the announcement and is more than 30% higher than its volume-weighted average price over the past three months. Following the news, MGM Resorts shares surged by 15% to $50.40 in New York trading, contributing to a year-to-date gain of about 38%, significantly outperforming the S&P 500 Index's 11% increase.
Diller initially invested in MGM Resorts in 2020, through IAC, acquiring roughly a 12% stake for approximately $1 billion during the pandemic. He saw MGM as a business with robust real-world assets that AI couldn't easily replicate and significant digital growth opportunities, particularly in online betting through BetMGM, a venture co-owned with Entain. People Inc. expects to fund the acquisition using a combination of cash, debt, and equity funding commitments, anticipating it will own just over 50.1% of MGM's equity, with other investors potentially holding minority interests.
Diller stated in a letter to MGM's board that the company's businesses were not realizing their full potential as a public entity. He highlighted MGM's substantial presence on the Las Vegas Strip, controlling 40% of the area, as well as its leading properties in Macau and an upcoming resort in Japan, all of which he considers to be significantly undervalued by the market. MGM's board has announced it will carefully review Diller's proposal to determine the best course of action for the company and its shareholders.
