Sept 24 (Reuters) – Shares of MGM Resorts slid 9% on Thursday after media mogul Barry Diller’s People Inc withdrew its more than $18 billion proposal to buy the casino operator.
At $34.40 in premarket trading, MGM’s stock was on track for its lowest open in seven months, if losses hold, and the slump was set to wipe out all gains made since the People announced the bid.
People, which already owns 27% of MGM, had offered to buy the remaining shares for $48.30 apiece in June, driving the casino operator’s stock to an 18-year high then.
The deal would have allowed Diller’s group, known for iconic brands such as People magazine and Travel + Leisure, to expand beyond its traditional media operations.
People did not provide a specific reason for withdrawing the deal, although Diller said, “we didn’t feel the mix was coming together in the way we had hoped.”
This was the second take-private offer for a casino operator this year, following hospitality billionaire Tilman Fertitta’s agreement to buy out Caesars Entertainment in May.
Truist Securities analysts had said MGM Resorts, as a part of People, “could potentially operate better under less short-term focused investor scrutiny,” echoing broadly positive market sentiments on the deal.
Meanwhile, shares of People Inc, which are down by a fifth since Diller first announced the proposal, were little changed before the bell.
MGM owns marquee properties that account for roughly 40% of the Las Vegas Strip. However, growth has been uneven, with its top market, the US, facing sluggish footfalls, even as its digital operations and assets in China, including Macau, have performed well.
Analysts rate MGM “hold” on average, same as its peer Caesars, while smaller competitors Las Vegas Sands and Wynn Resorts are rated “buy,” according to LSEG-compiled data.
(Reporting by Nandan Mandayam in Bengaluru; Editing by Leroy Leo)
