People Inc Withdraws $18 Billion Offer to Acquire MGM Resorts International
U.S. publisher People Inc has withdrawn its proposal to buy all remaining public shares of MGM Resorts, although it retains a 27% stake and does not rule out further negotiations.
Key Takeaways
- People Inc has withdrawn its $18 billion offer to acquire all shares of MGM Resorts.
- The decision caused an immediate 8% drop in MGM shares in after-hours trading.
- People Inc retains a 27% interest in MGM Resorts International and does not rule out resuming negotiations.
- MGM Digital increased its revenue by 20% year-on-year in Q2, but reported an EBITDAR loss of $31 million.
- The news coincides with Fertitta Entertainment's acquisition of Caesars Entertainment for $17.6 billion.
People Inc, the largest digital and print publishing group in the United States, has cancelled its intention to acquire all public shares of the casino operator MGM Resorts International, based in Las Vegas. This decision comes almost four months after People Inc made a cash proposal of $18 billion at $48.30 per share, aimed at purchasing the capital of MGM that it did not already own.
Withdrawal of the Offer and its Effects on the Market
The withdrawal from People Inc, led by Barry Diller, was made known after the MGM Resorts board formed a special committee to negotiate in favor of its shareholders' interests. Following the announcement of the withdrawal, MGM's shares fell by 8% in after-hours trading, ending Monday, September 23, with an additional decline of 3%, settling at $37.85 on the New York Stock Exchange. In contrast, the initial announcement of the offer in May resulted in a 15% increase in MGM's share value.
In a statement, Diller explained:
"There are many aspects to consider in a proposal of this type and we did not feel they were aligning as we had hoped." — Barry Diller, Chairman of People Inc
Current Stake and Future Prospects of People Inc in MGM Resorts
Despite withdrawing the offer, People Inc retains 66.8 million shares, representing 27% of MGM Resorts' capital. The company asserts that its confidence in the future of the group "remains intact" and that it continues to fully support the direction and outlook of the casino operator. As Diller stated:
"We remain open and interested in exploring the possibility of a strategic operation with MGM Resorts and will consider various alternatives in the future." — Barry Diller, Chairman of People Inc
Diller has been on the board of MGM Resorts since the summer of 2020 and, in addition to leading People Inc, chairs Expedia and co-founded Fox Broadcasting Company alongside Rupert Murdoch. Forbes estimates Diller's net worth at $5.9 billion by 2026.
Details of the Proposed Operation and Financial Structure
The original proposal aimed to turn MGM into a private company under the majority control of People Inc. The plan anticipated financing the operation through People Inc and MGM's own funds, additional debt, and capital contributions. Upon completion, People Inc would have control with 50.1% of the shares, while other investors, including current MGM shareholders, would maintain minority stakes.
MGM Resorts: Key Assets and Digital Performance
MGM Resorts International manages iconic complexes in Las Vegas, such as Bellagio and Aria Resort & Casino, and has international properties, including MGM Cotai and MGM Macau in Macau. In North America, MGM owns 50% of BetMGM, and through its subsidiary MGM Digital and LeoVegas Group, operates online brands in international markets. MGM Digital reported revenues of $196 million in the second quarter, a year-on-year increase of 20%, although with EBITDAR losses of $31 million, exceeding the $26 million negative from the previous period. MGM Digital’s Chief Commercial Officer, Gary Fritz, anticipates significant profitability by 2027.
MGM Resorts' Chairman, Paul Salem, reaffirmed the board’s commitment to the company’s independence:
"Our leadership position in Las Vegas, the excellence of our regional properties, and the advancement of BetMGM show the value we bring to shareholders. Our international portfolio and the opportunity in MGM Osaka reinforce that direction." — Paul Salem, Chairman of MGM Resorts
Mergers and Acquisitions Landscape in the U.S. Casino Sector
The withdrawal of People Inc coincides with a wave of operations in the sector. Caesars Entertainment, a competitor of MGM Resorts both offline and online, is in the process of being acquired by Fertitta Entertainment, which has made a cash offer of $31 per share, valuing the operation at $17.6 billion, including debt. Caesars’ shareholders have endorsed the deal this week.
Although the withdrawal of the proposal represents a pause in the consolidation process for MGM, the continuity of the shareholding and Diller's statements leave the door open for future corporate moves in the U.S. gaming sector.
Frequently Asked Questions
Why did People Inc cancel the acquisition of MGM Resorts?
People Inc decided to cancel the acquisition after considering that the key factors of the proposal were not aligning as expected, according to Barry Diller. The group will maintain its 27% stake in MGM Resorts and leaves the door open for future dealings.
What impact did the withdrawal of the offer have on MGM's shares?
The withdrawal of the offer caused an immediate 8% drop in the value of MGM Resorts' shares in after-hours transactions. The final price on Monday, September 23, was $37.85.
What stake does People Inc retain in MGM Resorts after canceling the operation?
People Inc retains 66.8 million shares, equivalent to approximately 27% of the capital of MGM Resorts International, and has reiterated its confidence in the company's management.
What other major operations are happening in the U.S. casino sector?
Caesars Entertainment is being acquired by Fertitta Entertainment with a cash offer of $31 per share, valuing the operation at $17.6 billion, already backed by Caesars' shareholders.
What are the main assets and recent results of MGM Resorts?
MGM Resorts owns iconic casinos in Las Vegas and Macau, operates BetMGM, and its digital division reported $196 million in Q2 revenues with an EBITDAR loss of $31 million.
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About the author
Gonzalo Marín
Industry Deals Correspondent
Gonzalo Marín covers the corporate deal flow of gambling — operator strategy, M&A, regulated-market entries, and product launches. The reports open with the transaction, cite companies, valuations, and jurisdictions exactly as released, and keep the announcement apart from its actual effect. When a Latin American operator raises capital or a European brand lands in the region, Gonzalo Marín reports who signs, for how much, and on what terms.
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