NASDAQ-listed media and entertainment company makes $18 billion offer to take over full ownership in MGM Resorts
People Incorporated (previously IAC) has made an offer to acquire all of the shares in MGM Resorts International that it does not already own for $48.30 per share in cash.
People Inc. is America’s largest publisher and currently owns 26.1 per cent of the outstanding common stock of MGM Resorts.
Formerly known as InterActive Corp. (IAC), the company has submitted a non-binding proposal to MGM Resorts’ Board of Directors to acquire the remaining 73.9 per cent stake for $48.30 per share in cash.
This proposal represents a premium of 24.1 per cent to the volume-weighted average price of MGM Resorts’ common stock for the 30 trading days ending on May 29, and a 10.6 per cent premium to the most recent closing price on Friday.
“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,” said People Incorporated chairman and senior executive Barry Diller. “That conviction has only strengthened over time.
“We continue to believe the market materially undervalues the power and durability of MGM’s assets. We believe MGM’s management team is superb, and that there is a compelling opportunity to support MGM’s next phase of growth and help unlock its full value.”
Any transaction would be funded by a combination of existing cash on hand at People Incorporated and MGM Resorts, and additional debt and equity funding commitments.
People Inc. expects that it will own just over 50.1 per cent of the equity of the company, with other investors holding minority interests.
“I believe this transaction would deliver significant benefits to the shareholders of both companies,” continued Diller. “MGM shareholders would be given the opportunity to de-risk their investment and realize immediate, attractive value in cash for their shares. We are confident in our ability to execute on a transaction promptly with engagement from the MGM Board of Directors.”
In a letter to MGM Resorts’ Board, People Incorporated said that MGM Resorts’ assets and businesses are “not currently realizing their full potential in the public markets” and that it will be difficult to correct this situation in MGM’s current form as a public company.
“Accordingly, we would like to work with MGM to agree on a transaction in which our company and other investors provide MGM’s public shareholders with an attractive premium in cash for their interest in MGM, and MGM would become a private company,” said People Incorporated.
People Inc. owns more than 40 brands including PEOPLE, Food & Wine, Travel + Leisure, InStyle, Better Homes & Gardens, and Southern Living, attracting a total of 175 million consumers each month.
In a statement Monday, MGM Resorts confirmed that it received an offer from People Inc.
“The company’s Board of Directors, in consultation with its financial and legal advisors, will carefully review and consider the proposal to determine the course of action that it believes is in the best interests of the company and all of its shareholders,” the company said. “The company cannot provide assurances that such proposal or any subsequent proposal will result in an agreement or a transaction being reached or, if so, as to the timing, price or other terms and conditions of any such agreement. The company remains focused on advancing its position as the world’s premier gaming entertainment company.”
Shares in MGM Resorts International (NYSE:MGM) soared by 14.93 per cent to $50.19 per share in New York Monday following the announcement, while shares in IAC Inc (NASDAQ:IAC) were trading 0.58 per cent lower at $44.63.