MGM Resorts is considering a takeover of media holding People Inc, a week after People Inc withdrew its $18bn offer for a 73% stake in the casino operator. The Wall Street Journal reported the reversal citing sources familiar with the matter. People's stock rose 10% over the week while MGM shares dropped nearly 15%.
Barry Diller, who has owned 27% of MGM since 2020, said the 'ingredients' of the deal did not come together as expected. His stake is valued at roughly $3bn — the same as People Inc's entire market capitalisation. Diller said he retains full confidence in MGM and remains open to a strategic deal with the operator. Both People Inc and MGM declined to comment.
Diller had sought MGM's hard assets as a hedge against AI disruption in People's media and publishing business, which includes People magazine, Food & Wine and other titles. What MGM stands to gain from acquiring a publishing house remains unclear. The casino operator's shares have lost a quarter of their value over the past month. MGM board chairman Paul Salem made no comment on a possible People acquisition, stating only that the company has 'a clear path to shareholder value creation'.
Analysts maintain a positive view on MGM. Chad Beynon of Macquarie called the company's current valuation of roughly $5.9bn a 'stark discount'. Barry Jonas of Truist holds a Buy rating with a $55 price target against the current $32.50. The market attributes the collapse of the original deal to high borrowing costs and regulatory hurdles rather than operational issues at the operator.
