Barry Diller’s People Inc. has withdrawn its roughly $18 billion proposal to take MGM Resorts International private, sending the casino operator’s stock tumbling and ending months of closed-door negotiations. The media company and the casino operator confirmed the decision in a joint announcement, closing out one of the more closely watched potential deals in the gaming industry this year.
The Deal That Wasn’t
People Inc. withdrew its proposal to acquire all outstanding shares of MGM Resorts that it did not already own, according to the joint statement from the media company and the casino operator. The proposed transaction had valued MGM Resorts at more than $18 billion, according to reporting on the companies involved. People Inc. had offered $48.30 per share in cash for the remaining stock, and the original proposal was submitted on June 1, according to the company.
People Inc. currently owns approximately 27% of MGM Resorts, equal to about 66.8 million shares, according to the company. That sizable stake had fueled speculation for months that Diller was positioning himself to fully absorb the Las Vegas giant into his media empire. Instead, the deal collapsed without a formal transaction ever materializing.
Diller, who serves as chairman and senior executive of People Inc., explained the decision plainly. “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,” he said. He did not close the door entirely on future involvement with the casino giant. “We remain open to and interested in the possibility of a strategic transaction with MGM Resorts and look forward to considering a range of alternatives,” Diller said.
The withdrawal followed several months of negotiations between People Inc. and a special committee appointed by MGM’s board, according to market reporting. That committee had presumably been tasked with evaluating the fairness of the $48.30-per-share offer and negotiating terms on behalf of shareholders who were not affiliated with Diller’s company. Whatever sticking points emerged during those talks, they proved significant enough to scuttle the deal entirely rather than result in a revised offer.
Market Reaction
Investors reacted swiftly and negatively to the news. MGM’s shares had already fallen about 8% in after-hours trading on Wednesday when the withdrawal was first announced, according to reporting on that session. The selling continued into the next trading day.
Shares of MGM Resorts slid about 9% on Thursday following the withdrawal announcement, according to market reporting on that day’s trading. The stock’s troubles extended into the premarket session as well.
- Wednesday after-hours: down about 8%
- Thursday regular trading: down about 9%
- Thursday premarket: trading at $34.40
MGM’s stock was on track for its lowest open in seven months in premarket trading at $34.40, if those losses held, according to reporting on Thursday’s premarket activity. The steep decline stands in sharp contrast to the stock’s trajectory just months earlier. The June bid had driven MGM’s stock to an 18-year high at the time it was announced, according to market reporting, underscoring just how much value investors had attached to the prospect of a Diller-led buyout.
The swing from an 18-year high to a seven-month low in a matter of months illustrates how heavily MGM’s valuation had come to depend on the deal materializing. With that catalyst removed, shareholders who had bid up the stock in anticipation of a $48.30-per-share payout were left recalibrating their expectations for the company’s standalone prospects.
MGM’s Response and What Comes Next
MGM’s leadership sought to project confidence in the wake of the withdrawal. Paul Salem, chairman of the MGM Resorts Board, struck an upbeat tone despite the collapsed negotiations. “The Board remains excited to continue to lead MGM Resorts as a standalone company,” Salem said.
That standalone company remains a formidable player on the Las Vegas Strip. MGM owns marquee properties that account for roughly 40% of the Las Vegas Strip, according to market reporting, giving the company an outsized footprint in one of the world’s most valuable gaming and entertainment corridors. That scale is part of what made the company such an attractive target for Diller in the first place, and it remains a significant asset regardless of who ultimately controls the company’s shares.
For now, People Inc.’s roughly 27% ownership stake remains intact, leaving Diller as a major shareholder even without a path to full ownership. Diller’s comments suggest the relationship between the two companies is far from over, even if the specific $18 billion buyout structure has been shelved. Whether that means a smaller strategic partnership, a renewed takeover attempt down the road, or simply a continued large minority stake remains unclear. Investors, having watched the stock swing wildly on the news, will likely be watching closely for any signal of what “a range of alternatives” might actually include.
