Now Diller makes MGM move
Barry Diller’s People Inc reportedly prepping MGM Resorts bid
Long-time shareholder looks at $18bn takeout of Las Vegas giant.
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People pleaser
Up with people: Barry Diller’s People Inc is reported to be preparing an offer to buy out the near-75% of MGM Resorts that it doesn’t already own in a deal which would value the business at $18bn.
The New York Times’ Dealbook reported today that Diller is looking at offering $48.30 a share, which would be a 10% premium to the $43.68 price as of close on Friday.
The news sent the shares up 11% on opening in New York.
People get ready: Diller’s People Inc, which changed its name from IAC in April to the name of the media company that Diller also owns, has been on the shareholder register at MGM Resorts for six years and as of Q1 owns 26% of the stock.
Diller also sits on the board at MGM alongside a further nominee of People Inc.
The NYT noted that it wasn’t yet clear whether a bid from People Inc would prompt further competitive interest in MGM but said the size of its existing stake could act as a block on any other deals coming to the table.
The paper added that the proposal is “still being finalized and could be delayed or scrapped.”
On People Inc’s recent Q1 call, Diller said the company would “continue to invest” in MGM Resorts, adding that he “couldn’t be more excited about its future.”
“The prospects for MGM, I think, are outstanding,” he said, noting the project nearing completion in Japan.
“The closer we get to it, the closer people will understand how discounted MGM is.”
Cheap thrill: Diller told the analysts that he was “quite happy for it to be discounted” because it allowed MGM to buy back stock at ~45% of its average level over the last five years.
“I’m kind of glad it’s been discounted because it has allowed us to buy back so much of the stock,” he added.
“The discount that it currently has will close at some point. I’m not anxious for it to close too soon.”
Diller added of Las Vegas that the fears of a downturn were overblown. “Las Vegas has gone through endless cycles,” he said. “Nobody is killing Las Vegas.”
“People are going to come to our places,” he added. “There’s not going to be a way for AI in any way to disintermediate them. And I truly love that one.”
On show: Just this morning, the analysts at Texas Capital, writing about the gaming sector post-the news about the Fertitta approach for Caesars last week, said that it was a “large showcase of public equity investors currently undervaluing traditional gaming.”
The team noted that Caesars joins other M&A and take-privates in the casino sector that have occurred at well-below historical valuations over the past few years.
These include Golden Entertainment, IGT, Everi and PlayAGS.
LBO selector: In a note issued late last week, the analysts at CBRE identified MGM Resorts as one of the companies that could be attractive to potential LBO or MBO buyouts due to the sector’s strong free cash flow generation, proven revenue durability, depressed public valuations and reasonable interest rate environment.
Other names put forward by CBRE included Accel Entertainment, Entain, Melco Resorts & Entertainment and Penn Entertainment.
See Wednesday’s Earnings+More, which will look in more depth at the M&A landscape for gaming.
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