Barry Diller’s People Incorporated wants to acquire the remaining shares of MGM Resorts International. The deal is valued at $18 billion.
People Incorporated, also known as IAC, is MGM’s largest shareholder and has a a 26.1% stake in the company. The proposal offers shareholders $48.30 per.
In a letter to MGM’s board, Diller argues that the company’s business is not being fully valued by public markets. A long-term value must be unlocked.
If the offer is completed, People Incorporated will be left with 50.1% ownership of MGM, which is a majority control. Existing shareholders will stay as a minority.
Diller, who serves on MGM’s board of directors, noted that he will not participate in any board discussion that is about the proposal.
The deal also includes MGM’s stake in BetMGM, its online betting with Entain. If the acquisition goes through, then CEO Bill Hornbuckle and the current management team will remain the same.
The company has also planned to fund the purchase of cash, debt, and equity. Yet, the offer is not finalized and should still be negotiated.
Former MGM executive Alan Feldman said that the company has long been undervalued by public markets.
As there is a perceived risk, the companies often trade at lower valuations.
Fertitta Entertainment agreed to buy Caesars Entertainment and take it private. The MGM proposal came after it.
If both deals happen, two of the biggest U.S. casino operators will move back into private ownership.
