The New York-based publishing giant People Inc (formerly known as IAC) has launched a bid to increase its holdings in the casino operator MGM Resorts International to 50.1%.
In a press release, MGM officials said they are now “carefully reviewing” the proposal. They vowed to act “in the best interests of the company and all of its shareholders.”
If completed in its current form, the deal would make MGM a private subsidiary of the media firm, ending public trading in the operator.
“MGM’s assets and businesses are not currently realizing their full potential in the public markets,” People Inc said in a letter to MGM’s executive board, as reported by Inc. “It will be difficult to correct this situation in MGM’s current form as a public company.”
People Inc: MGM Resorts Can Be AI-Proof
People Inc has made several high-profile acquisitions and sales in recent years, offloading big-name firms once they become more profitable.
The holding company offloaded the care-giving platform Care.com in March this year at a loss of almost $200 million, six years after paying $500 million for the company.
MGM Resorts’ share prices ballooned on the news, with the firm’s five-day share price rising by almost 33%.
People Inc already owns around 26% of MGM’s shares, making it the casino operator’s biggest single shareholder.
Its new offer would see it buy the remaining shares of the firm at $48.30 per share, almost 11% above the close of trading on the New York Stock Exchange last week.
The deal values the company’s shares at $18 billion, including existing debts.
All-Cash Deal
People Inc says the deal will be an all-cash transaction, funded by a mix of its own capital, equity financing, and loans.
The media giant first began investing in MGM Resorts in August 2020, when it snapped up a 12% stake in the casino operator for around $1 billion.
At the time, People Inc’s chairman Barry Diller said he hoped to help MGM move into the online casino sector.
“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,” Diller said of his firm’s most recent bid.
Diller added that his conviction about the AI-proof nature of the casino sector “has only strengthened over time.”
MGM’s Nevada ‘Entertainment Nucleus’
People Inc told the MGM executive board that “given our large stake in the business today and our deep familiarity with the business,” the deal would benefit all parties.
Diller wrote to People Inc this year to explain that MGM’s key asset is its ownership of around 40% of the Las Vegas Strip.
In the same letter, he called the strip an “entertainment nucleus.”
MGM Resorts currently operates 31 resorts in seven US states. It also operates in the autonomous Chinese region of Macao via its majority-owned subsidiary MGM China Holdings.
The latter operates the MGM Macau and the MGM Cotai, both of which rank among Asia’s most profitable resort-casinos.
MGM China’s revenues rose 10% in the first quarter of the financial year, despite a drop in VIP markets.
The company is also set to open Japan’s first integrated casino-resort in Osaka in 2030.
