Diller's People Inc withdraws $18bn MGM Resorts takeover offer

People Inc, the media company controlled by Barry Diller and MGM Resorts' largest shareholder, has rescinded its $18 billion offer to take the operator private, according to iGaming Business.

The bid, lodged in June, would have seen People Inc acquire the 73% of MGM it did not already own for $48.30 a share. That price briefly lifted MGM's stock when the offer became public, but the shares have since fallen almost 25% over the past month as optimism faded, iGaming Business reported. Following Wednesday's announcement, MGM shares dropped 11% to around $33.50, while People Inc's stock was little changed.

Diller, 84, said in a statement carried by iGaming Business that People Inc remained "open to" further talks despite walking away from this attempt. "There are lots of ingredients that go into a proposal of this kind on its way to completion," he said. "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."

MGM chairman Paul Salem struck a more confident tone, saying the board "remains excited" about the company's future as an independent operator, citing its position in Las Vegas, its regional casinos and BetMGM's momentum as sources of shareholder value, according to the statement reported by iGaming Business. Salem also pointed to MGM China's Macau operations and the MGM Osaka project, due to open in 2030.

Wall Street's reaction was subdued. Macquarie's Chad Beynon kept an "Outperform" rating and Truist's Barry Jonas maintained a "Buy" rating, both with $55 price targets, iGaming Business reported. Beynon attributed the collapse to financing complexity rather than any reassessment of MGM's underlying value, arguing that the deal's implied enterprise value of about $5.9 billion represented a steep discount given the group's mix of physical and digital assets.

Jonas said the outcome was unsurprising once MGM's share price diverged from the offer level, and suggested the regulatory burden of overseeing a company as complex as MGM, given People Inc's lack of other gaming interests, may have weighed on the decision.

Rising financing costs across the US casino sector formed part of the backdrop. Fertitta Entertainment's roughly $17.9 billion pursuit of Caesars Entertainment, a deal of similar scale, has also been shaped by borrowing costs, with Fertitta holding its $31-per-share offer partly because of a $6.6 billion financing package. Company executives told regulators in July they were waiting for more favourable lending conditions that have yet to materialise, iGaming Business noted.

MGM now continues alone with several open questions. Its Las Vegas luxury properties are performing well, with $2.2 billion in second-quarter revenue and $735 million in adjusted EBITDA, but budget properties including Luxor and Excalibur remain under pressure, chief operating officer Ayesha Molino told analysts, as reported by iGaming Business.

Regional revenue hit a quarterly record of $904 million on a same-store basis, and MGM National Harbor in Maryland stands to benefit from a nearby Sphere venue, though that project is not expected to open until 2030. MGM Springfield in Massachusetts is facing a lawsuit from the city over alleged breaches of its host community agreement, and MGM withdrew its bid for a full commercial licence at Empire City in New York last year.

BetMGM, the operator's joint venture with Entain, has so far avoided entering the prediction markets space pursued by rivals FanDuel, DraftKings and Fanatics, reportedly out of concern for MGM's casino licences. In Japan, MGM Osaka remains the sole licensee under construction, though officials have confirmed a further licensing round will open next year, potentially bringing new competition.