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MGM Resorts Shares Slump After People Withdraws Buyout Proposal

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MGM Resorts Shares Slump After People Withdraws Buyout Proposal

MGM Resorts International's (MGM) shares tumbled early Thursday after digital and print media company People (PPLI) withdrew its buyout proposal for the casino operator.

In early June, People submitted a nonbinding offer to purchase all the shares it didn't already own in MGM Resorts for $48.30 apiece in cash. The media conglomerate holds a roughly 27% stake in the casino operator.

"There are lots of ingredients that go into a proposal of this kind on its way to completion," People Chairman Barry Diller said in a statement late 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."

In a separate statement, MGM Resorts confirmed the withdrawal, saying a special committee of its board had spent the past several months negotiating with People.

MGM Resorts shares were down 9.1% in premarket activity Thursday.

"The board remains excited to continue to lead MGM Resorts as a standalone company," MGM Resorts Chairman Paul Salem said. "Our international portfolio of MGM China and the significant opportunity ahead with MGM Osaka support a clear path to increasing shareholder value."

People's withdrawal doesn't come as a surprise as MGM Resorts' stock closed Wednesday trading about 22% below the offer price, Truist Securities said.

"While it's unclear which specific ingredients explicitly were, we would note the regulatory complexity of a company like MGM," the brokerage said in a note to clients. "In our (post-second-quarter) MGM follow-up, (management) noted there wasn't anything it could to do as a private company that it can't do today as a public company."

In July, MGM Resorts reported better-than-expected second-quarter results. Last month, People's second-quarter earnings rose year over year, while revenue fell.

People remains "open to and interested in the possibility of a strategic transaction with MGM Resorts," Diller said Wednesday. The company is looking forward to considering "a range of alternatives" for the business, Diller said.

In May, casino operator Caesars Entertainment (CZR) agreed to be acquired and taken private by Fertitta Entertainment in an all-cash deal worth roughly $17.6 billion.

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