People Inc. Proposes $18B Acquisition of MGM Resorts
People Inc. currently owns 26.1 percent of outstanding MGM common stock.
Barry Diller’s People Inc., formerly known as IAC, has proposed acquiring MGM Resorts International in an all-cash transaction valued at approximately $18 billion. Under the proposal, People would acquire all outstanding MGM shares it does not already own for $48.30 per share.
The offer represents a 10.6 percent premium to MGM’s most recent closing share price. The company currently owns 26.1 percent of MGM’s outstanding common stock, a position it has built over the past six years.
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The proposal follows other recent consolidation activity in the gaming sector, including Fertitta Entertainment Inc.’s $5.7 billion acquisition of Caesars Entertainment, announced last week.
According to MGM, the company currently operates a total of 31 resorts and casinos globally, with a high concentration in Las Vegas. MGM is the largest resort operator on the Las Vegas Strip, with nearly 37,000 hotel rooms across 13 properties, according to the Las Vegas Review-Journal. Included in the company’s operating portfolio are MGM Grand, Bellagio, ARIA Resort & Casino and Empire City Casino in Yonkers, N.Y.
A shift in strategy
Over the past several years, MGM has sold real estate associated with several flagship properties while continuing to operate the resorts. One example is Bellagio Hotel & Casino. In 2019, Blackstone agreed to purchase the 2-million-square-foot property and lease it back to MGM. Blackstone paid $4.3 billion for the asset, while MGM retained operational control of the property.
The companies later completed another sale-leaseback transaction involving ARIA Resort & Casino and Vdara Hotel & Spa in 2021. Blackstone acquired the real estate for approximately $3.9 billion, while MGM continues to operate both resorts.
During the same period, MGM also sold Circus Circus to an affiliate of Phil Ruffin for $825 million. The deal closed in December 2019 and included the hotel and casino as well as a 37-acre festival site.
In early 2020, MGM Growth Properties—MGM’s REIT—and Blackstone’s Real Estate Income Trust formed a joint venture to acquire MGM Grand and Mandalay Bay for $4.6 billion. As part of the transaction, MGM Resorts entered into a long-term triple-net master lease and continues to operate both resorts.
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