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MGM Resorts Amends Voting Agreement With Barry Diller's People Inc. Following Withdrawn Bid
MGM Resorts International (NYSE: MGM) has amended its voting agreement with People Inc., the investment vehicle of media mogul Barry Diller, according to a company statement on Wednesday. The move follows the withdrawal of People Inc.'s more than $18 billion proposal to acquire the casino operator in September.
Terms of the New Pact
The revised agreement sets new guardrails for the relationship between MGM and one of its significant shareholders. Key provisions include:
- People Inc., Diller, and related entities are now required to vote their MGM shares in line with the board's recommendations in the event of a sale or change-of-control transaction, subject to certain conditions.
- The investor group's combined ownership of MGM is now capped at 29.9%, restricting them from making further share purchases beyond this threshold.
- In return, MGM has agreed not to adopt defensive measures, such as a "poison pill," that would target People Inc. and its affiliates, provided they adhere to the agreement's terms.
Strategic Implications
AdThis amended agreement provides a level of stability for MGM's management and board while navigating its future strategy. It effectively prevents a hostile takeover attempt from Diller's group while formalizing their role as a major, but not controlling, shareholder.
MGM Board Chairman Paul Salem said the agreement gives the company flexibility to pursue share repurchases and, if appropriate, a change-of-control transaction consistent with its fiduciary duties. However, MGM Resorts clarified that the agreement does not commit either party to a specific transaction and that no deal is currently under consideration. The company stated its focus remains on its operating strategy and shareholder value.
Background on the Withdrawn Offer
The new voting arrangement comes a month after People Inc. withdrew its unsolicited proposal to acquire MGM Resorts. The bid, valued at over $18 billion, would have combined Diller's investment firm with one of the world's largest casino and entertainment companies. The withdrawal ended a significant M&A storyline in the gaming sector, and this amended agreement now defines the path forward for the two entities.
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