Barry Diller's People Inc. Pulls $48.30-a-Share Bid for MGM Resorts, Stock Drops 11%

Barry Diller's People Inc. is done trying to buy MGM Resorts International, at least for now. The company confirmed Wednesday, September 23, that it had rescinded its proposal to take the casino operator private, ending roughly four months of negotiations that started when People submitted a non-binding offer of $48.30 per share in June.

MGM shares paid the price. The stock fell about 11% Thursday to $33.68, according to Baystreet.ca, while Yahoo Finance pegged the drop closer to 10%, with shares trading near $34.04 during the session. TradingView reported the stock initially dropped 11% in after-hours trading once the news broke, while shares of People Inc. itself rose 4%.

People Inc., formerly known as IAC, already owns roughly 26.1% to 27% of MGM, depending on the source, a stake CNBC and the Las Vegas Review-Journal both put at 66.8 million shares. Diller isn't selling any of it. He said in the company's statement that People remains "undimmed" in its belief in MGM's future and has "total confidence in both the management and the company's prospects."

Why Diller Walked

Diller's public explanation was vague. "There are lots of ingredients that go into a proposal of this kind on its way to completion," he said in the press release. "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."

CNBC's David Faber reported financing was the sticking point. The deal would have loaded MGM with significant debt, and that debt load ultimately sank the negotiations, not necessarily a disagreement over the $48.30 price itself. Neither company gave a detailed public account of where talks broke down, according to the Las Vegas Review-Journal, which noted MGM's board had formed a special committee of independent directors to evaluate the offer over the past several months.

Bank of America responded by cutting MGM to a neutral rating, according to Traders Agency, though the firm did not attach a specific price target to the downgrade.

The Case People Made, and MGM's Answer

People's original pitch was that MGM's stock didn't reflect the real value of its assets, and that taking the company private would let it unlock that value away from public-market pressures, the Review-Journal reported. That's a standard argument for going private, and it's one plenty of activist and strategic buyers have made about undervalued gaming stocks before.

MGM's board isn't buying it, at least not at this price or on these terms. Chairman Paul Salem said the board "remains excited to continue to lead MGM Resorts as a standalone company," pointing to the company's Las Vegas Strip footprint, BetMGM's growth, and international projects including MGM China and the upcoming MGM Osaka development. "Our international portfolio... support a clear path to increasing shareholder value," Salem said in the statement.

A Rough Week for Casino Takeovers, a Better One Elsewhere

The MGM reversal landed just two days after Caesars Entertainment shareholders approved a very different outcome for a Las Vegas rival. About 65.4% of Caesars' outstanding shares voted in favor of billionaire Tilman Fertitta's $17.6 billion offer to take that company private, according to a regulatory filing cited by the Review-Journal. Caesars holders are set to receive $31 per share in cash once the deal, still subject to regulatory approval, closes.

Meanwhile, consolidation elsewhere in entertainment kept moving forward. Paramount's $111 billion takeover of Warner Bros. Discovery cleared its biggest legal obstacle when Paramount settled the antitrust lawsuit brought by California Attorney General Rob Bonta and other Democratic state attorneys general, according to Fox News, avoiding a trial that had been scheduled for March 2027. That deal, unlike MGM's, is proceeding toward completion, with CEO David Ellison set to take over WBD's studios and news operations, including CNN and CBS News.

For MGM, the immediate question is what Diller does next as the company's largest individual shareholder. He said People remains "open to and interested in" a future strategic transaction and will "consider a range of alternatives," but gave no timeline or terms. Whether that means a revised offer, a different structure to avoid the debt problem Faber described, or simply years of sitting on a quarter of the company's stock is unresolved. MGM's board, for now, is betting shareholders are better off without a buyout at all.