MGM Resorts International has left open the possibility of acquiring People Inc., in a striking reversal after the media group abandoned its attempt to take control of the casino operator.
Bill Hornbuckle, MGM’s chief executive, said the company would continue to act in shareholders’ interests and seek to “unlock the value of a company that we think is grossly undervalued”.
His comments came at the Global Gaming Expo this week, after a report that MGM was exploring an offer for People Inc. The publishing and holding company, formerly known as IAC, owns about 27% of MGM and is its largest shareholder.
People Inc. withdrew a proposal last week to acquire the rest of MGM for $48.30 a share. Barry Diller said the combination of factors needed to complete the deal had not come together as hoped, while adding that People Inc. remained interested in a possible strategic transaction with MGM.
MGM shares were trading at about $32 before the gaming industry discussion, substantially below the price offered by People Inc. in June.
Hornbuckle pointed to MGM’s portfolio, including BetMGM, its operations in Macao, properties in Las Vegas and a resort being built in Japan. He described Diller and People Inc. as “an amazing shareholder” and said the businessman remained bullish on Las Vegas.
“There’s nothing like it replicated anywhere in the world,” Hornbuckle said. “It is the one place, particularly in his world, where AI won’t disintermediate it.”
He said Las Vegas was based on physical experiences that artificial intelligence could not replace. “People are coming here to enjoy things physically, and that’s not going to change,” he added.
Casino dealmaking gathers pace
The prospect of a transaction involving MGM and People Inc. comes as other prominent investors pursue opportunities in the casino and hospitality sectors.
Caesars Entertainment shareholders last week approved a $17.6 billion sale, including assumed debt, to Fertitta Entertainment. The deal will bring Caesars’ casino and digital operations together with Tilman Fertitta’s Golden Nugget casinos, Landry’s restaurant group and other hospitality assets.
Caesars chief executive Tom Reeg said private ownership would allow management to take a longer-term approach. The transaction is undergoing an extended review by the Federal Trade Commission, which has issued a second request for information.
Reeg said some properties could ultimately be sold to address competition concerns, although he did not expect any disposals to have a major impact on the combined business.
He said interest from Diller, Fertitta and activist investor Carl Icahn suggested that sophisticated investors saw long-term value in Las Vegas despite weaker visitor numbers and concerns over prices.
