MGM Resorts Eyeing Bid for Barry Diller’s People Incorporated
Billionaire’s company, which has a stake in MGM, also owns titles including Food & Wine magazine
- MGM Resorts is discussing making a bid to purchase Barry Diller’s People Incorporated, which owns a roughly 27% stake in MGM.
- The discussions come just after People Incorporated withdrew its own bid to buy MGM Resorts.
- Analysts have said they believe shares of both People Incorporated and MGM are undervalued.
MGM Resorts MGM -10.99%decrease; down pointing triangle is discussing making a bid to purchase Barry Diller’s People Incorporated, which owns a roughly 27% stake in MGM, according to people familiar with the matter.
It is an unusual turn of events that comes just after People withdrew its own bid to buy the casino and resort company. If it decides to proceed, MGM could make its proposal in the coming days, the people said. It could still change course.
People PPLI -0.11%decrease; down pointing triangle, which owns titles including People magazine, Food & Wine and Southern Living, as well as stakes in car-sharing company Turo and the Daily Beast, has a market value of around $2.7 billion. MGM’s is around $8.5 billion after its shares dropped over 10% Thursday on news of People withdrawing its bid.
Diller’s company purchased the bulk of its MGM stake in 2020 during the Covid-19 pandemic lockdown, when the Las Vegas company’s shares were trading much lower. The stake is now worth around $2.5 billion, according to FactSet estimates. That is roughly the same as People’s entire market value, suggesting to many on Wall Street that the market isn’t recognizing potential value in People’s seemingly disparate holdings.
Analysts have said that they believe shares of both People and MGM are undervalued, given the former’s cash cushion and advertising business and the latter’s strong Las Vegas presence. MGM’s interests include resorts such as the Bellagio in Las Vegas and others around the world, table game revenue and online betting operations including BetMGM.
While MGM’s exact intentions couldn’t be learned, a deal for People could potentially be a way for MGM to buy back a large chunk of its shares while getting other assets for an attractive price, some of the people said.
Diller had pursued a long-shot deal for People to buy MGM, making a bid in June that would have valued MGM around $12.4 billion and searching for potential equity partners. He argued that the casino company couldn’t realize its full potential in public markets and the acquisition would give People a hedge against the upheaval of artificial intelligence by doubling down on live events and gaming. But he walked away from the effort on Wednesday.
“We didn’t feel the mix was coming together in the way we had hoped and have decided not to pursue taking the company private at this time,” Diller said. He added that People remains “open to and interested in” a strategic transaction with MGM Resorts.
People Incorporated, which changed its name from IAC earlier this year, has been making moves to simplify its holdings and focus on its core assets, namely its publishing portfolio and the MGM stake.