Barry Diller’s People Inc Withdraws $18 Billion Offer to Take MGM Resorts Private
People has scrapped its bid, causing shares to tumble, though Diller maintains a 27% stake
Barry Diller’s People Inc. has withdrawn its offer to purchase all public shares of MGM Resorts International.
Back in June, Diller’s company — which already owned 26.1% of the common stock of MGM at the time — offered to buy the remaining shares it didn’t own at $48.30 per, representing some $18 billion.
But late Wednesday evening — mere hours after Caesars announced its shareholders had approved a plan to sell the company to Tilman Fertitta — Diller pulled the plug on the MGM deal. Shares of MGM cratered in the aftermarket, dropping to a low of $33.70, down from its close at $37.84.
“There are lots of ingredients that go into a proposal of this kind on its way to completion,” Diller said in a statement. “We didn't feel the mix was coming together in the way we had hoped and have decided not to pursue taking the company private at this time. What is undimmed is our belief in the future of MGM Resorts. We continue to hold 66.8 million shares representing approximately 27% of MGM Resorts and have total confidence in both the management and the Company's prospects."
Diller had started buying up shares in the company during the COVID pandemic.
For its part, MGM Resorts International is ready to move on.
"The Board remains excited to continue to lead MGM Resorts as a standalone company,” Paul Salem, chairman of the MGM Resorts Board, said in a statement. “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. In addition, our international portfolio of MGM China and the significant opportunity ahead with MGM Osaka support a clear path to increasing shareholder value.”
Not a ‘major surprise’
Quick reaction from the street was muted.
“We don’t think this should come [as] a major surprise, given MGM closed today -22% below the offer price despite trading as much as +5% above when the offer was announced,” wrote Barry Jonas of Truist in a Wednesday night note to investors. “Shares are off another ~9% post-close, which could reflect some event-driven exits.”
He also noted that “our MGM upgrade was largely predicated on a Strip inflection on easier comps, though that has not been as smooth as we’d hoped.”
But just because this deal is off the table doesn’t mean Diller is necessarily done with doing something with MGM down the road.
"We at People Incorporated remain open to and interested in the possibility of a strategic transaction with MGM Resorts and look forward to considering a range of alternatives," he said.
Jeff Edelstein is a longtime columnist, reporter, radio host, and fantasy sports aficionado, not necessarily in that order. He lives in New Jersey with his family.
