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LAS VEGAS (FOX5) — People Incorporated has announced Monday a newly submitted proposal to acquire all outstanding shares of MGM Resorts International in an apparent takeover bid.
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According to a release, People Inc. confirmed it would be offering to acquire all company shares it does not already own for $48.30 per share in cash. Currently, People Inc. currently owns 26.1% of MGM’s outstanding common stock.
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CNBC reports that the proposal will value MGM at $18 billion.
Barry Diller, chairman and senior executive of People Inc., said the company began investing in MGM nearly six years ago.
“We believed it represented a rare kind of business: one with real world assets that AI cannot easily replicate or disintermediate and exceptional digital growth opportunities,” Diller said. “That conviction has only strengthened over time.”
Diller said the market materially undervalues MGM’s assets and that there is a compelling opportunity to support MGM’s next phase of growth.
“I believe this transaction would deliver significant benefits to the shareholders of both companies,” Diller said. “MGM shareholders would be given the opportunity to de-risk their investment and realize immediate, attractive value in cash for their shares.”
People Inc. expects to fund the transaction with a combination of existing cash on hand at People Inc., MGM, additional debt and equity funding commitments.
EN ESPAÑOL: People Inc. propone la adquisición de MGM Resorts por $18,000 millones
The company expects it will own just over 50.1% of the equity of MGM, with other investors holding minority interests. Those investors may include existing MGM shareholders.
In a letter to MGM’s board of directors, Diller said People Inc. believes MGM’s assets and businesses are not currently realizing their full potential in the public markets and that it will be difficult to correct this situation in MGM’s current form as a public company.
The proposal is subject to customary conditions, including the negotiation and execution of a mutually satisfactory binding agreement. The transaction would not be subject to any financing condition.
The transaction would be subject to limited competition approvals and applicable gaming regulatory approvals.
People Inc. expects MGM’s current management team to continue to lead the business.
Diller confirmed People Inc. has no intention to sell its existing ownership stake in MGM or to pursue or vote in favor of any merger or other transaction that would result in a change in control to another party.
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People Inc., previously known as IAC, is the owner of more than 40 media brands including PEOPLE, Food & Wine, Travel + Leisure, InStyle, Better Homes & Gardens and Southern Living. Barry Diller is also known for co-founding Fox News Broadcasting alongside Rupert Murdoch.
MGM has confirmed that it has received the proposed bid and will review it to determine what the next best steps are.
“The Company cannot provide assurances that such proposal or any subsequent proposal will result in an agreement or a transaction being reached or, if so, as to the timing, price or other terms and conditions of any such agreement,” MGM shared in a release. “The Company remains focused on advancing its position as the world’s premier gaming entertainment company.”
Culinary Union responds
The Culinary Union released statements about two major gaming deals, including a proposed share buyout of MGM Resorts International by People Inc. announced today and a separate group’s proposal to buy Caesars Entertainment announced last week.
The union’s statements on both deals carried similar messages focused on protecting worker rights and jobs.
Ted Pappageorge, Secretary Treasurer of the Culinary Union, said the situation is not new for the industry.
“These are blockbuster transactions. But this isn’t the first time we’ve dealt with this. All of these companies, every one of them on the Strip, have been bought and sold over the last 10, 15 years,” Pappageorge said.
The union says it represents 35,000 workers at Caesars and MGM properties throughout Nevada.
Pappageorge said existing contract language protects workers regardless of ownership changes.
“No matter who buys them, the workers stay. And their benefits stay, their seniority stay, their wages stay, their jobs stay and their contract stays in place,” Pappageorge said.
He said new ownership typically brings plans for changes.
“And if they are looking to cut, we’ll be ready for them. Our contracts are in place. But if they’re looking to come in and really expand and grow the business and move forward, we’re also going to be ready to collaborate and work with them,” Pappageorge said.
Pappageorge said visitation numbers remain unsteady but said changes that benefit the companies will benefit workers and Las Vegas.
“I think and we think we think that these companies that are eyeballing Las Vegas can see that there is, the future is, it bodes well for Las Vegas and for travel, tourism and hospitality,” Pappageorge said.
Pappageorge said there are stories of corporate raiders destabilizing companies and making money off the parts. He said he does not think that is the case with the Caesars deal. He said with MGM it remains to be seen. The Culinary Union said it has had a long-standing relationship with MGM Resorts international and expects that relationship to continue.
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