June 1 (Reuters) – Media mogul Barry Diller’s People Inc said on Monday it has proposed to buy MGM Resorts, valuing the casino operator at more than $18 billion.
The offer comes just weeks after Diller, the digital media company’s chairman, told shareholders in an April 28 letter that People would sharpen its focus on its MGM stake, calling the stock “wildly undervalued.”
People currently owns 26.1% of the outstanding common stock of MGM. It is planning to bid $48.30 a share in cash for the remaining company, representing a premium of about 10.6% to MGM’s Friday close of $43.67.
MGM’s shares rose more than 10% in premarket trading, while those of People – renamed from IAC in April – rose nearly 3%.
MGM Resorts did not immediately respond to a Reuters request for comment.
Diller’s interest in MGM dates back to the COVID-19 pandemic, when he began accumulating shares in the casino operator when its shares were battered by closures and travel restrictions.
MGM owns marquee properties that account for roughly 40% of the Las Vegas Strip. However, the casino operator has been struggling with sluggish footfalls in Las Vegas, and in recent quarters has relied on growth in its China properties, including Macau, and digital operations.
The company’s BetMGM venture has also emerged as one of the leading U.S. online sportsbooks, giving higher exposure to a digital gambling market that analysts have been bullish on.
For Diller, MGM is a sharp departure from digital media, giving his group access to an industry focused on travel and tourism at a time when markets remain volatile.
The offer also marks another major takeover attempt in the casino sector. Last week, hospitality billionaire Tilman Fertitta’s firm announced the takeover of Caesars Entertainment in a $17.6 billion deal.
(Reporting by Aatreyee Dasgupta and Nathan Gomes in Bengaluru; Editing by Leroy Leo)
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