MGM Resorts (MGM) Stock Spikes 15% on Barry Diller Takeover Report

TLDR

• Barry Diller’s People Inc. is preparing an all-cash offer to buy MGM Resorts at $48.30 per share
• The deal values MGM at over $18 billion and targets the 73.9% of the company People Inc. doesn’t already own
• MGM stock jumped as much as 15% to $50 in premarket trading Monday
• People Inc. already holds a 26.1% stake in MGM and has two board seats, including one held by Diller
• The bid represents a 10.6% premium over MGM’s Friday closing price

Barry Diller’s People Inc. is preparing an all-cash offer to acquire MGM Resorts International, valuing the casino operator at more than $18 billion, according to a report from The New York Times’ DealBook published Monday.

MGM Resorts International, MGM

MGM stock jumped as much as 15% to $50 in premarket trading on the news.

The proposed bid is $48.30 per share for the 73.9% of MGM that People Inc. doesn’t already own. That price represents a 10.6% premium over MGM’s closing price last Friday.

People Inc., formerly known as IAC, already holds a 26.1% stake in MGM, making it the company’s largest shareholder.

Diller himself holds one of two board seats that People Inc. occupies at MGM. Former IAC CEO Joey Levin also sits on the board.

The deal, if it goes through, would be a full takeover — consolidating People Inc.’s existing foothold into outright ownership of one of the biggest names in casino gaming.

What the Deal Looks Like

The offer is structured as a straight cash deal, with no equity component reported. People Inc. would need to fund the acquisition of roughly three-quarters of a company that runs some of the most recognisable properties on the Las Vegas Strip.

MGM’s portfolio includes the Bellagio, MGM Grand, and Aria. The company has also been building out its sports betting and online gaming operations in recent years.

No timeline has been given for when a formal offer would be submitted to MGM’s board.

Where Things Stand

Neither MGM Resorts nor People Inc. responded to requests for comment from Reuters or Barron’s at the time of reporting.

Because Diller and Levin both sit on MGM’s board, any formal offer would almost certainly require a special committee of independent directors to evaluate the bid — a standard process when insiders are involved on both sides of a deal.

That process could add time before any decision is made public.

People Inc. rebranded from IAC earlier this year. The company has long held its stake in MGM, and the two organisations have had closely linked leadership for some time.

The $48.30 per share offer price is the number that has been reported. MGM’s stock trading at $50 premarket suggests the market is pricing in some probability the deal closes at a higher number, or that a competing bid could emerge.

As of Monday morning, MGM stock was trading up more than 10% ahead of the opening bell.

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