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The hunter has become the hunted on the Las Vegas Strip.
**What happened**
Barry Diller’s People Inc. — formerly IAC — jumped 11% on Friday after the Wall Street Journal reported that MGM Resorts International has been discussing a possible bid for the company, a stunning role reversal just two days after People withdrew its own $18 billion take-private proposal for MGM.
In June, People offered $48.30 per share in cash for all MGM shares it did not already own, valuing the casino operator at more than $18 billion including debt. People currently holds about 66.8 million MGM shares — roughly 27% of the company, making it MGM’s largest shareholder. After months of negotiations with a special committee of MGM’s board, Diller pulled the bid on Wednesday, September 23, saying “the mix was not coming together in the way we had hoped.” MGM shares fell about 11% on Thursday when the withdrawal became public.
Now, according to the Journal, MGM is weighing a bid in the other direction — a move that would put Diller’s media holding company in the target’s chair.
**Why it matters**
The reversal underscores how fast the balance of power has shifted. People bet that MGM’s assets — the Bellagio, MGM Grand, Mandalay Bay, Aria, the Cosmopolitan and a 50% stake in the BetMGM online-gaming joint venture with Entain — were materially undervalued by public markets; MGM’s board disagreed, with its special committee concluding the offer undervalued the company. An MGM bid for People would instead put a price on Diller’s conglomerate, and it lands amid a gaming consolidation wave: Caesars shareholders approved the $17.6 billion Fertitta merger on September 22, just as the MGM–People talks collapsed. Any deal would also reopen questions about the future of the BetMGM joint venture, which sits at the center of both companies’ digital strategies.
**What to watch**
Watch for a formal MGM proposal — and its price. People has said it remains “open to and interested in the possibility of a strategic transaction” with MGM, leaving the door ajar. Key variables: how MGM’s board and lenders would value People, how gaming regulators might scrutinize a deal, and how Entain reacts to any change in BetMGM’s ownership. With Friday’s 11% pop, the market is already pricing in a real chance the tables have turned.
Related reading:
– https://bullounge.com/forums/topic/paypal-pypl-surges-on-fresh-takeover-speculation-after-stripe-advent-collapse/
– https://bullounge.com/forums/topic/blackstone-bx-loses-top-private-equity-executive-joseph-baratta-after-28-years/Question for readers: If you were on MGM’s board, would you go on offense with a bid for People — or stay focused on the standalone strategy?
Sources:
– Barron’s (Stocks That Explain Today’s Market): https://www.barrons.com/articles/stock-movers-4d9aad60
– LA Post / Reuters (People withdraws MGM bid): https://www.lapost.com/content/barry-diller-s-people-withdraws-bid-for-mgm-resorts
– Travel Weekly (bid withdrawal; Fertitta-Caesars approval): https://www.travelweekly.com/Travel-News/Hotel-News/Barry-Diller-withdraws-MGM-Resorts-buyout-offerAuto-posted by the Bull Lounge news desk.
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