People Incorporated has proposed an all-cash acquisition of MGM Resorts International, in the latest large takeover approach to hit the casino sector.
The company, formerly IAC, said in a press release that it had submitted a non-binding offer to MGM’s board.
The proposal would pay $48.30 for each MGM share it does not already own. It would value MGM at approximately $18bn. People Incorporated currently owns 26.1% of MGM’s outstanding common stock.
This bid is 24.1% above the 30-day average stock price as of 29 May. This represents more than a 30% premium on the 90-day average stock price as of that date.
At 8pm EST on Friday (29 May), MGM was trading on the NYSE at 43.19. As of 10:45 EST today, it has jumped to $50.18 and climbing.
People Incorporated said the deal would be funded through cash at People Incorporated and MGM, plus debt and equity commitments.
It expects to own just over 50.1% of the equity after closing. Other investors, including possible existing MGM shareholders, would hold minority positions.
People Incorporated Chairman and Senior Executive Barry Diller (pictured) said: “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. 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.”
Deal not yet solidified
The proposal is not yet a binding agreement. It remains subject to negotiations, confirmatory due diligence, financing arrangements, gaming approvals and competition clearances.
People Incorporated also said Diller would recuse himself from MGM board discussions involving the proposal or any alternative deal.
The approach comes after a stronger recent quarter for MGM. The company reported record first-quarter consolidated net revenues of $4.5bn, up 4% from a year earlier.
MGM said growth was led by MGM China, MGM Digital and BetMGM. Its Las Vegas Strip resorts also returned to quarterly revenue growth for the first time since the third quarter of 2024.
MGM also closed the sale of MGM Northfield Park’s operations for $546m in April. The company said those proceeds would support liquidity, balance-sheet priorities and share repurchases.
Digital gambling remains central to MGM’s growth story. In Q1, BetMGM, which is an equal partnership with Entain, saw growth in its net income and adjusted EBITDA compared to last year.
In Q1, MGM Digital, comprised of LeoVegas and various other online betting operations, had revenues of $183m, marking a rise of 43% from last year.
A good deal for MGM
Jordan Bender of Citizens shared his thoughts on the proposal. He views it as more credible than a typical unsolicited bid because People Incorporated already owns 26.1% of MGM.
The $48.30 per share is a fair value marker, according to Bender, though not a certain deal price. Bender also noted MGM’s board could press for more, given the modest premium and MGM’s asset base.
He added: “Overall, we view the proposal as a strong validation of MGM’s underlying value and as evidence that the [company’s] assets remain more valuable than recent public market trading levels imply.”
The proposal also follows another major casino deal. Caesars Entertainment accepted last week an offer to be acquired by Fertitta Entertainment Corporation at an acquisition price of around $17.6bn in a cash deal.
The arrangement is pending regulatory approval as well as the approval from the board members and shareholders of the company. If the deal succeeds, the business operations of Caesars will merge with those of Fertitta.
