MGM Resorts stock has risen in pre-market trading after a news report on Friday suggested the casino operator remains locked in takeover talks with the media billionaire Barry Diller.
Diller, the People Inc CEO and Fox Broadcasting Company founder, tabled an $18 billion bid to boost his firm’s holdings in MGM Resorts to 51% in early June. Unnamed sources close to the negotiations told the Wall Street Journal last week that talks between the parties remain ongoing.
Share prices in MGM Resorts rose by 2.5% ahead of market opening on July 13. Shares then rose by over 1.3% once the market opened, with traders apparently confident a deal could be on the horizon.
Diller’s plan involves taking the casino operator off the stock market. People Inc wrote to MGM shareholders earlier this year, explaining that “it will be difficult” to boost the operator’s revenues “in MGM’s current form as a public company.”
MGM Resorts Stock Rises: Takeover Optimism Grows
The unnamed sources told the Wall Street Journal that MGM has created a special board committee to negotiate the deal.
However, the price of the package appears to be a sticking point.
Diller offered to pay $48.30 a share in June. This offer values MGM at about $12.4 billion. MGM has yet to publicly respond to the offer.
The source said MGM officials do not think Diller’s offer is high enough.
Diller’s company already owns roughly 26% of MGM. At the time of writing, MGM shares are currently trading at around $47.50.
MGM is yet to respond to the offer, but the unnamed sources said that discussions between the parties have “heated up” in July.
Parties Call in Financial Advisers
The casino operator has also allegedly hired financial advisers to help evaluate Diller’s proposal. Diller, meanwhile, is reportedly consulting bankers “including some at JPMorgan Chase” to discuss financing options.
Diller has expressed confidence in People Inc’s ability to raise the money for the deal.
The billionaire said that cash resources could partially fund the deal. He also talked of positive “preliminary conversations” with potential investors and banks.
MGM Resorts is best-known for owning about 40% of the Las Vegas Strip. Diller has called MGM’s Strip holdings a “key asset,” referring to Las Vegas as an “entertainment nucleus.”
However, amid gloomy forecasts for Las Vegas casinos, the firm’s MGM China and MGM Digital arms are experiencing upward growth.
Hotel occupancy at top MGM casino-resorts in Macao is currently up to 94%, with tourism numbers in the special administrative region continuing to rise.
MGM Cotai revenues rose to over $676 million in the first quarter of the financial year. Its sister resort, MGM Macau, made $434 million in the same period.
Las Vegas is braced for big changes in the months ahead. Fertitta Entertainment has inked an agreement to buy the rival Las Vegas behemoth Caesars in a deal worth $17.9 billion.
Tilman Fertitta, the Fertitta CEO, is best known as the owner of the Golden Nugget Casinos and the Houston Rockets NBA franchise.
