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MGM Resorts International will continue operating as a standalone public company after conglomerate People Inc withdrew its proposal to acquire all public shares of the US-based gaming group and take it private.
According to reports, the valuation of MGM Resorts’ stocks in the June 1 buyout offer was higher than their prevailing stock prices. In a report from Reuters and other business publications, it emerged that the valuation of MGM Resorts, whose negotiations spanned four months, was over US$18 billion.
Board Remains Committed to Standalone Path
In a statement released on Wednesday, Paul Salem, chairman of MGM Resorts, stated that the board is still eager to continue leading MGM Resorts as an independent entity. The statement came after talks by a special board committee over a period of months with the goal of serving the interests of MGM Resorts’ stockholders.
Mr. Salem cited the strength of their Las Vegas market leadership, their best-in-class regional assets, and the progress made by BetMGM as some reasons for the worth they offer their shareholders. He also pointed to the group’s international portfolio, including MGM China and the significant opportunity ahead with MGM Osaka, as supporting a clear path to increasing shareholder value.
The MGM Osaka venture, which is being planned by local partners, will cost JPY1.51 trillion (approximately US$9.54 billion) and is scheduled to open in 2030. This will be a big step-up in their presence in Asia, with the resort coming along with their presence in Macau through MGM China Holdings Ltd.
Share Price Below Offer Level
MGM Resorts’ shares closed at US$37.85 on Wednesday trading in the US. The People Inc proposal in June had offered US$48.30 per share, which is 27.6% above Wednesday’s closing price.
Withdrawal of the offer implies that there will be no premium for the shareholders since the offer was withdrawn earlier in the year. Nevertheless, the management has been confident in the company’s capacity to create value using the current business model and expansion projects.
Barry Diller, People Inc’s chairman and senior executive, said there are lots of ingredients that go into a proposal of this kind on its way to completion. He added that People Inc did not feel the mix was coming together in the way it had hoped and decided not to pursue taking the company private at this time.
People Inc Retains Significant Stake
Despite dropping the takeover bid, People Inc remains a major shareholder in MGM Resorts. Mr Diller noted that the conglomerate continues to hold 66.8 million shares, representing approximately 27% of MGM Resorts, and expressed total confidence in both the management and the company’s prospects.
The entrepreneur also thanked the special committee and all the MGM directors for giving People Inc time and consideration during the process. He added that People Inc is doing just fine, with its principal publishing business achieving its 11th quarter of growth and having plenty of cash to both invest in its business and purchase its stock.
The decision to retain the stake suggests that People Inc still sees long-term potential in MGM Resorts, even as it steps back from the takeover attempt. The conglomerate’s continued presence as a significant shareholder could provide stability and support for the gaming group’s strategic initiatives.
Focus Shifts to Growth Projects
With the takeover proposal off the table, MGM Resorts can now focus fully on its operational priorities and expansion plans. The group’s portfolio spans key markets in the US, including Las Vegas and regional properties, as well as international ventures in Macau and Japan.
The MGM Osaka project remains a centerpiece of the company’s growth strategy, with its 2030 opening date setting a clear timeline for the development. Alongside this, the group’s online gaming operation, BetMGM, continues to build momentum in the competitive US digital gaming market.
Source: GGR Asia
