People Inc, the holding vehicle of media mogul Barry Diller and MGM Resorts' largest shareholder, has withdrawn its $18bn takeover offer for the casino operator. The bid was lodged in June, but the parties failed to reach agreement. Both companies said MGM will continue as a standalone entity.
Diller had offered to acquire the 73% of MGM that People Inc did not already own at $48.30 per share. The stock briefly reached that level after the announcement but has since dropped nearly 25% over the past month. MGM shares fell 11% to $33.50 on Thursday following news of the withdrawal. Diller said People Inc remains open to future discussions but 'the mix did not come together the way we had hoped'.
The 84-year-old businessman was betting on MGM's physical assets at a time when markets have been focused on technology and AI. Financing proved the main obstacle. Macquarie analyst Chad Beynon said the issue was capital availability rather than MGM's valuation, noting that the implied value of the operator's assets at around $5.9bn represents a discount given its portfolio of land-based and online properties.
US credit markets have tightened as inflation remains elevated and the Federal Reserve has raised rates for the first time in three years, with 30-year Treasury yields reaching their highest level since 2004. Fertitta Entertainment faces similar difficulties in its attempt to acquire Caesars for $17.9bn and is waiting for lending conditions to improve.
Truist analyst Barry Jonas suggested that MGM's regulatory complexity may have deterred People Inc, which has no other gaming operations. Both analysts maintained positive ratings with a $55 price target.
MGM will now continue developing BetMGM with Entain, the MGM Osaka project due to open in 2030, and its casino portfolio in Las Vegas and regional markets. Budget properties such as Luxor and Excalibur remain under pressure, while the online business lags competitors in emerging categories such as prediction markets.
