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Intriguing company bids $18 billion to take MGM private, including BetMGM Casino
The majority shareholder proposes that MGM Resorts International, owner of BetMGM Casino, goes private to help the company realize its "full potential".
Another major gambling giant could be going private after People Incorporated proposed to buy out all outstanding shares of MGM that the former doesn't already own for $48.30 per share, valuing MGM at over $18 billion. The offer would include not only MGM's land-based properties but also the group's interest in BetMGM Casino.
People Inc. offers premium price on remaining MGM shares
Owner of popular publications like People Magazine, People Inc. already stands as MGM's largest shareholder with a 26.1% interest in the company. What People Inc. proposes is to purchase all remaining shares to take MGM private.
The proposed price of $48.30 per share represents a 10.6% premium to last week's share prices for MGM Resorts.
Barry Diller, chairman and senior executive of People Inc., noted in a statement that the offer came as recognition that MGM Resorts represents "a rare kind of business" that cannot be replicated by artificial intelligence. It also has the potential for "exceptional digital growth opportunities," such as the BetMGM Casino app.
People Inc. first invested in MGM about six years ago, and Diller said his company still believes that the market "materially undervalues the power and durability of MGM's assets." What's more, if the transaction goes through, MGM's management staff will continue leading the business. After all, Diller said, "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."
Why People Inc. is offering to take MGM Resorts private
People Inc. said in a press release that it expects to own just over 50.1% of MGM's post-closing equity, giving it control of the business, while other investors – including current MGM shareholders – would hold minority interests.
In a letter to the MGM board of directors, Diller emphasizes that the group's assets and businesses, which obviously includes one of the nation's best mobile casinos, "are not currently realizing their full potential in the public markets." Diller added that "it will be difficult to correct this situation in MGM's current form as a public company."
For its part, MGM Resorts confirmed in a press release that it will review and carefully consider the proposal to determine the best course of action for the company and its shareholders. Diller, who serves on the MGM board, noted separately that he would recuse himself from board deliberations surrounding the offer.
Diller, though, doubled down in his letter to the board, saying that the transaction "would deliver significant benefits" to MGM shareholders.
Offer comes on heels of Caesars Entertainment takeover
The People Inc. offer is the second headline-grabbing proposal in recent weeks. Caesars Entertainment agreed to a reported $17.6 billion acquisition by Fertitta Entertainment.
The deal includes not only Caesars' 58 land-based casinos but also its popular real money online casino brands, such as Caesars Palace Online Casino.
Like Diller's offer, Fertitta will pay shareholders at a heavy premium. According to reports, the cost runs at $31 per share, reflecting a 49% premium.
