People Inc. Makes $18 Billion Bid to Take MGM Resorts Private

^{A view of the Vegas Strip shows several MGM casinos that could become privately operated if the People Inc. deal is accepted. (Photo: Maverick Helicopters / X)} 

The Las Vegas Strip could soon have two of its largest casino operators under private ownership, and the announcements came less than a week apart. People Inc. announced that it has submitted a proposal to acquire MGM Resorts International for $48.30 per share in cash. This proposal would put the company's total value at $18 billion.

The company, formerly known as IAC, is already the largest shareholder of MGM Resorts, holding 26.1% of the company's outstanding stock. Under the offer, the company expects to own just over 50.1% of the shares and control of the company if the deal is accepted. 

MGM Resorts confirmed that it received the proposal and is discussing its next steps with its financial and legal advisers.

If approved, People is likely to take MGM Resorts private. The announcement comes less than a week after Caesars announced it agreed to be acquired by Golden Nugget owner Tilman Fertitta for $17.6 billion. That deal could take up to a year to close, but Caesars will become a privately operated company when it is completed.

Why Is People Inc. Pursuing MGM Resorts?

The MGM Resorts offer did not come out of nowhere. In a letter to shareholders announcing the company's name change to People Inc, IAC Chairman and Senior Executive Barry Diller noted his interest in extracting value from its ownership stake in MGM Resorts.

His press release to the MGM Resorts board explained why People is interested in furthering its relationship with the company.

"We continue to believe the market materially undervalues the power and durability of MGM's assets," Diller wrote. "We believe MGM's management team is superb, and that there is a compelling opportunity to support MGM's next phase of growth and help unlock its full value."

Diller sees potential in all of MGM's assets, and that starts with Las Vegas: "MGM owns 40% of the Las Vegas Strip—an entertainment nucleus that simply cannot be replicated anywhere in the world.” 

That 40% stake encompasses some of the most recognizable properties on the boulevard. MGM's Las Vegas Strip portfolio includes Bellagio, ARIA, The Cosmopolitan, MGM Grand, Mandalay Bay, Excalibur, Luxor, New York-New York, Vdara, and Park MGM. Along with the Caesars deal, People Inc's bid would put more of the Las Vegas Strip under private ownership than at any point in the city's modern history.

He also feels that MGM has a strong digital business and positions in Asia. But his written affinity for the Asian holdings could be questioned, since speculation is already emerging that Diller could shed MGM China and MGM Japan if the deal closes to focus on U.S. core assets.

MGM Could Become a Public Company Again

MGM Resorts could become a public company again after Diller makes changes. It is likely that MGM Resorts will only be a private company for the short term. According to Motley Fool, Diller is known for "acquiring a business, growing that business, and spinning it out."

In other words, he takes a company private, adds value, and reduces expenses in ways that are easier when a company does not have to respond to quarterly shareholders. He then follows up on the changes by bringing the company public again with a different agenda.

The People brand is best known for its magazine, which features celebrity news, human-interest stories, and pop culture. The new company has 40 media brands, including Food & Wine, Travel + Leisure, and InStyle.

Diller started his career in entertainment with Paramount, ABC, and Fox and moved into the digital arena with companies like Expedia, Ticketmaster, and Turo. One of his early major online acquisitions was Ask Jeeves.

There could be significant marketing potential between People Inc. media brands and MGM Resorts' casinos in Las Vegas and across the country.

It may not move the needle financially, but the potential for content from the new Park MGM streaming lounge at Park MGM with celebrities, musicians, well-known chefs, and different brands could be fantastic.

The deal will more likely focus on creating business efficiencies with more digital integration and AI, but we can dream.