Barry Diller, the billionaire media executive and MGM Resorts director, is trying to buy the other 73.9% of the company that he does not own.
Diller offered $48.30 a share for the outstanding shares of MGM in a letter to CEO Bill Hornbuckle and Chairman Paul Salem. That is a 10.6% premium to Friday‘s closing price and a 30% premium to the stocks volume-weighted average price for the previous 90 trading days.
MGM’s stock jumped on the news and closed Monday at $50.69, up 16.1% from Friday’s close on volume of nearly 26.7 million. The price trading higher than the offer price suggests the market believes a higher proposal might come.
People Inc., formerly IAC, does not intend to own 100% of MGM Resorts. The release states People Inc. will own just over 50.1% with minority investors, potentially including existing MGM shareholders, owning the rest.
Diller: MGM not hitting full potential
Diller’s letter said the company’s assets are “not currently realizing their full potential in the public markets.” It will be “difficult to correct” if the company remains public, he added.
MGM’s current management team would continue to run the business.
“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,” Diller said. “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.”
Given Diller’s position, he is recusing himself from any board discussions about the takeover.
Diller initially invested in MGM in 2020
Diller’s company first invested in MGM in August 2020, taking a 12% stake for a $1 billion investment.
Just 10 days later, MGM added Diller and IAC CEO Joey Levin were added to MGM’s board.
Diller more than doubled that stake in the nearly six years since the initial investment, announcing ownership of 26.1% in an amended ownership report filed Monday morning.
Second deal impacting iGaming
This is the second massive offer for a casino company that includes a significant online casino and sports betting operator in the past week.
Along with MGM’s 50% of BetMGM potentially changing hands, Tilman Fertitta offered to buy Caesars with an all-cash $17.6 billion proposal last Thursday.
The transactions could change how the two largest U.S. online gambling brands owned by casino companies operate and compete for market share against the leaders in FanDuel and DraftKings as well as surging contenders bet365 and Fanatics.
Neither agreement should lead to the brands expanding into prediction markets. The stance taken by Nevada regulators means the companies must stay out to keep their Las Vegas licenses valid.
Both companies think digital is undervalued
The common denominator between BetMGM and Caesars is that both owners are disappointed with the lack of digital valuation reflected in their stock prices.
In March, MGM CFO Jonathan Halkyard said there could come a time when MGM would be “compelled” to look for other ways to monetize the digital business if that valuation is not reflected in the stock.
Caesars noted in February that while it remains open to spinning off its digital business, valuations in the space since 2025 have not been right for a deal in the near term, CEO Tom Reeg said.
