Story
MGM Resorts Stock Falls 9% After People Inc. Withdraws $18 Billion Buyout Offer
Summary
Shares of casino operator MGM Resorts dropped sharply in premarket trading after media conglomerate People Inc. abandoned its bid to acquire the company for over $18 billion.
Shares of MGM Resorts International (NYSE: MGM) plunged on Thursday after media company People Inc. withdrew its more than $18 billion proposal to acquire the casino and hotel operator, unwinding a deal that had pushed the stock to multi-year highs.
Offer Rescinded
People Inc., the media conglomerate led by mogul Barry Diller, announced the termination of its offer but did not provide a specific reason for the decision. In a statement cited by Reuters, Diller said, "we didn’t feel the mix was coming together in the way we had hoped."
The company, which already owns a 27% stake in MGM, had offered to buy the remaining shares for $48.30 apiece in June. The deal was seen as a strategic move for People Inc. to expand beyond its traditional media operations, which include brands like People magazine and Travel + Leisure.
Market Reaction
MGM's stock slid 9% to $34.40 in premarket trading on Thursday, according to Reuters. If the losses hold through the market open, the stock is on track for its lowest start in seven months, a move that would erase all gains made since the acquisition bid was first announced.
AdIn contrast, shares of People Inc., which had declined by about a fifth since the proposal was first made, were reportedly little changed before the bell. The withdrawal marks the end of what would have been the second major take-private deal for a casino operator this year.
Context and Outlook
The initial offer in June had propelled MGM's stock to an 18-year high, with analysts broadly positive on the potential combination. Truist Securities analysts had previously suggested that MGM "could potentially operate better under less short-term focused investor scrutiny" as a private company.
MGM operates marquee properties that account for an estimated 40% of the Las Vegas Strip. The company has faced uneven performance, with sluggish footfalls in its core U.S. market offset by stronger growth from its digital operations and assets in Macau, China.
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