MGM Resorts has quickly gone from being a possible takeover target to looking at making an acquisition of its own. Only a day after Barry Diller’s People Inc. dropped its attempt to buy the casino company, reports say MGM is now considering buying Diller’s media business. This move shows MGM is confident about a comeback for its Las Vegas operations.
Diller’s $12.4 billion offer for MGM was always a long shot. He built most of his current 27% stake in MGM during the pandemic in 2020, when the stock seemed undervalued. However, he couldn’t get enough financing for a full buyout through his much smaller media company.
Still, MGM executives seem to think their stock is a good value as they look into a possible deal for People Inc., according to The Wall Street Journal. This kind of deal would let MGM regain a large stake in its own shares and pick up other assets, like People magazine.
People Inc. shares jumped in premarket trading on Friday, while MGM’s stock stayed about the same. Both companies did not respond right away to requests for comment.
Diller’s original investment idea was that MGM’s physical assets, like the Bellagio on the Las Vegas Strip, are still undervalued even as the market focuses more on digital businesses. He is not the only one who thinks this way. Caesars Entertainment is also being bought for $17.6 billion by a billionaire who owns a big stake in Wynn Resorts.
Both MGM and the billionaire investor seem to believe that traditional Las Vegas gaming will stay strong. However, most of the market is still unsure. MGM shares have lost all the gains they made after news of Diller’s takeover interest. Bally’s, a competitor, has also faced challenges with its big plans to build or expand casinos across the country.
With online sports betting and prediction markets becoming more popular, traditional casinos are now seen as a less common investment choice. Still, with several billionaire investors making big moves in this area, it might be worth watching more closely.
