People Inc withdraws $18bn MGM Resorts offer as MGM stays independent

People Incorporated, led by Chairman and Senior Executive Barry Diller, announced on 23 September that it has withdrawn its $18 billion proposal to take MGM Resorts private. MGM will continue as a standalone company.

A report later that week said MGM could instead consider a bid for People Inc. People Inc turned down a request from Reuters for comment, and iGaming Business received no response from MGM.

What happened

According to iGaming Business, the offer was lodged in June at $48.30 per share for the 73% of MGM that People Inc did not already own. In its press release, People Inc said it still holds 66.8 million MGM shares, roughly 27% of the company.

Diller said the elements of the proposal were not coming together as hoped, and that People Inc had decided not to pursue a take-private for now. He added that the company has total confidence in MGM's management and remains "open to and interested in the possibility of a strategic transaction with MGM Resorts".

MGM also confirmed the withdrawal. Chairman Paul Salem said in a statement that the company has a "clear path to increasing shareholder value" through its existing strategies. He pointed to MGM's Las Vegas and regional properties, BetMGM, its Macau business and MGM Osaka, which is due to open in 2030.

On, MGM shares fell 11% to about $33.50, and iGaming Business said they had lost nearly 25% over the previous month. People Inc shares were essentially flat that day.

Macquarie's Chad Beynon kept an "Outperform" rating and Truist's Barry Jonas kept a "Buy" rating, both with a $55 price target. Beynon said financing complexity, rather than any change in MGM's underlying value, drove the outcome. In his view, the implied enterprise value of roughly $5.9 billion placed on MGM amounted to "a striking discount". Jonas said the collapse was not a surprise given where MGM's shares traded relative to the offer price.

iGaming Business described the US money market as increasingly murky. Citing CNBC, it noted that the 30-year Treasury yield reached its highest level since 2004, and that the Federal Reserve had made its first rate increase in three years. It added that financing costs are also a key factor in Fertitta Entertainment's $17.9 billion acquisition of Caesars Entertainment.

The Wall Street Journal reported late, citing sources close to the matter, that MGM is reportedly mulling a bid for People Inc. According to iGaming Business, the WSJ said Diller's stake is believed to be worth about the same as People Inc's $3 billion market capitalisation. People Inc declined to comment to Reuters, while MGM did not respond to iGaming Business. Salem gave no indication of an acquisition plan in his response to Diller's exit.

Why it matters

Affiliates and operators with commercial ties to MGM or BetMGM are unlikely to face a change of ownership from this bid for now, but could check whether any agreements include terms linked to a change of control. A reverse approach has been reported and not confirmed.

The analyst comments suggest that financing costs are weighing on large gaming deals. Two large US operator transactions, the withdrawn MGM offer and Fertitta's Caesars acquisition, could be facing the same lending conditions.

The outcome could also leave BetMGM's strategy with MGM's existing management.

What's next

People Inc has said it remains open to a strategic transaction with MGM.