Barry Diller proposed an $18 billion takeover of MGM Resorts International on Monday, as his People Incorporated already owns 26.1% of its outstanding common stock.
The billionaire chairman intends to purchase the remaining 24.1% for $48.30 per share, giving his publisher (formerly known as IAC) just over 50.1% of the casino company.
“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. That conviction has only strengthened over time,” Diller said in a statement. “We continue to believe the market materially undervalues the power and durability of MGM’s assets. We believe 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.”
In a letter to the MGM board, Diller said that the takeover would be financed with a combination of existing cash on hand at People Inc. and MGM and additional debt and equity commitments.
If the deal is completed, People would own just over 50.1% of the equity of the company, with other investors holding minority interests. Those other investors may include existing MGM shareholders. Diller also said MGM’s current management team is expected to stay in place.
“I believe this transaction would deliver significant benefits to the shareholders of both companies. MGM shareholders would be given the opportunity to de-risk their investment and realize immediate, attractive value in cash for their shares,” he continued. “We are confident in our ability to execute on a transaction promptly with engagement from the MGM Board of Directors.”
The proposed deal would not be subject to any financing condition, but would require limited competition approvals and applicable gaming regulatory approvals.
Diller also said he’ll recuse himself from any deliberations of the MGM board regarding the proposed takeover or any alternative. He added that People will not sell its existing ownership stake in MGM, pursue or vote in favor of any merger or deal that would result in a change of control to another party, or dilute its economic and voting interest in MGM.
MGM Resorts shares surged 14% following Diller’s letter.
