American media giant People Incorporated has dropped its multi-billion dollar bid to acquire MGM Resorts International, one of the biggest gaming firms in the US and a significant player globally.
People Incorporated made a $18bn (£13.4bn) bid to acquire the remaining shares in MGM in June. Barry Diller’s multimedia giant is already a 27% stakeholder in the firm, and will remain so until its acquisition bid has been taken off the table.
MGM revealed that a special committee of its board has been negotiating with People Inc “over the past several months” with the stated intention “to advance the interests of its shareholders”.
“The Board remains excited to continue to lead MGM Resorts as a standalone company,” said Paul Salem, Chairman of the MGM Resorts Board.
Should it have proceeded, People Incorporated’s acquisition of MGM Resorts would have had international repercussions far beyond the borders of the US and the latter’s traditional home turf of Nevada and New Jersey.
It also would have seen a rare case of a company with a significantly lower valuation taking over a much larger one – People Incorporated had a market cap of $2.68bn as of the close of NYSE trading yesterday, while MGM Resorts’ was $9.5bn.
A bid for MGM’s global empire
MGM Resorts is, as its full name suggests, an international company, managing casino properties in China and Japan via the MGM China and MGM Osaka assets. However, in recent years it has become an increasingly important player in international betting.
In 2019, following the repeal of the federal PASPA legislation in 2018 by the US Supreme Court, the company embarked on a new online sportsbook venture – BetMGM, a 50/50 partnership with UK-founded multinational Entain.
A watershed moment was the $607m acquisition of Swedish online casino giant LeoVegas in 2022. LeoVegas has since become the platform for the BetMGM brand beyond the US.
While it is a 50/50 joint venture with Entain in the US, the international BetMGM operation is wholly owned by MGM Resorts and operated via LeoVegas.
The company has set up shop in the UK, the Netherlands, Brazil and Sweden, becoming the 23rd, 14th, 34th and 23rd biggest brand by online traffic in each respective country, according to the Blask Index.
“Our leading position in Las Vegas, our best-in-class regional properties, and BetMGM’s continued momentum highlight the value we bring to our shareholders,” Salem continued, following the dropping of People Incorporated’s bid.
“In addition, our international portfolio of MGM China and the significant opportunity ahead with MGM Osaka support a clear path to increasing shareholder value.”
This global empire would have all become People Incorporated, and Barry Diller’s, should the deal have been pulled off.
The deal could have also led to further speculation about the future of Entain, which has been the subject of acquisition interest by MGM Resorts in the past, though a $11bn offer back in 2021 was rejected by the UK company.
As it stands, MGM Resorts’ share price closed trading on the NYSE at $37.85 as of 4pm (UK time) 23 September, while Entain’s share price stands at £45 at the time of writing, down marginally from yesterday.
