MGM Resorts International (NYSE: MGM), the Las Vegas casino and resorts operator, saw its shares fall sharply after Barry Diller’s company People Incorporated withdrew its non-binding bid to take the company private. The stock had traded as a takeover arbitrage play since the offer emerged in June, and that premium is now gone.
MGM closed yesterday at $37.85, down 2.7% from Tuesday’s $38.90 close. Reuters reported the shares were quoted at $34.40 in today’s premarket trading, down 9%, pulling the stock back toward levels last seen before the June bid and further from its 52-week high of $51.59.
People Inc, which already owned around 27% of MGM, proposed in June to buy the rest of the company for $48.30 a share in cash, valuing the deal at more than $18bn and sending MGM shares sharply higher toward their 52-week high of $51.59. It withdrew that proposal yesterday without giving a specific reason beyond Diller saying the fit had not come together as hoped.
We didn’t feel the mix was coming together in the way we had hoped and have decided not to pursue taking the company private at this time.
Barry Diller, Chairman, People Incorporated
The withdrawal wipes out the gap between the $48.30 offer and yesterday’s $37.85 close, the premium that had built up since the bid was announced in June. People Inc said it retains its roughly 27% stake, equivalent to 66.8 million shares, and remains open to future alternatives, including a strategic transaction further down the line. MGM’s market capitalisation stood at about $9.5bn after the falls, roughly half the value the withdrawn $18bn offer had implied.
MGM’s board chairman Paul Salem said the company remains excited to continue leading MGM as a standalone business, pointing to its position on the Las Vegas Strip, where its properties account for around 40% of the Strip, alongside its regional casinos and BetMGM, its online sports betting and gaming venture.
Analysts rate MGM a hold on average, according to LSEG-compiled data cited by Reuters, against buy ratings for peers Las Vegas Sands and Wynn Resorts, a gap that stands out now that the takeover premium is gone.