MGM Resorts (MGM) Stock Plunges as Casino Giant Considers Acquiring Barry Diller's People Inc

Key Takeaways

Table of Contents

MGM Resorts is exploring an acquisition of Barry Diller’s People Inc, reversing roles less than 24 hours after People withdrew its $12.4 billion MGM takeover proposal.
Diller accumulated approximately 27% of MGM shares starting in 2020, capitalizing on pandemic-driven declines in casino operator valuations.
Shares of People Inc surged up to 11% during Friday’s premarket session following the acquisition reports.
MGM stock plummeted 11% before Friday’s opening bell, erasing earlier gains from the initial takeover speculation.
This transaction interest reflects broader momentum among billionaire investors targeting traditional Las Vegas gaming properties, exemplified by Tilman Fertitta’s $17.6 billion Caesars acquisition.

MGM Resorts stock has experienced dramatic volatility this week. The gaming and hospitality company is now pursuing discussions to acquire Barry Diller’s People Inc, coming just 24 hours after People abandoned its $12.4 billion proposal to purchase MGM.

Shares of MGM plunged 11% in premarket activity heading into Friday’s session. This decline wiped out the stock’s appreciation from earlier in the week when Diller’s takeover intentions initially surfaced.

MGM Resorts International, MGM

People Inc shares experienced opposite momentum. The stock surged as much as 11% during Friday’s premarket hours following the role reversal.

The Wall Street Journal initially broke the story that MGM leadership is evaluating a potential offer for People. Reuters subsequently verified the report through sources with knowledge of the discussions.

Both organizations have remained silent publicly. MGM did not return requests for comment, while People representatives declined to provide a statement.

The Strategic Logic Behind MGM’s Interest

Diller initiated his MGM investment campaign in 2020. Gaming companies were facing severe pressure from pandemic-related shutdowns and travel limitations, presenting what Diller perceived as a value opportunity.

His position expanded to roughly 27% ownership of MGM. The current value of this holding approaches the total market value of People itself.

Should MGM complete a People acquisition, the transaction would essentially function as a substantial stock buyback. Additionally, MGM would acquire People’s portfolio of media properties.

People, previously operating as IAC, controls notable publications including People magazine, Food & Wine, Southern Living, and the Daily Beast. In recent years, the organization has concentrated its operations around publishing assets and its MGM investment.

Renewed Confidence in Las Vegas Real Estate

Diller’s initial investment thesis centered on MGM’s tangible assets, such as the Bellagio, being underappreciated in a marketplace fixated on digital properties. This perspective has gained additional adherents.

Tilman Fertitta, proprietor of Golden Nugget, is acquiring Caesars Entertainment in a $17.6 billion transaction. Fertitta also maintains substantial ownership in Wynn Resorts.

These strategic moves indicate that prominent investors maintain bullish views on traditional casino real estate. However, market sentiment remains divided, evidenced by MGM stock’s recent downturn.

MGM’s competitor Bally’s has encountered similar headwinds, linked to its nationwide casino development and expansion initiatives. The entire sector faces intensifying competition from booming online sports wagering and prediction market platforms.

People’s latest quarterly earnings, disclosed last month, demonstrated enhanced profitability within its publishing operations. This performance came despite traffic challenges stemming from artificial intelligence-driven transformations in search algorithms.

Should MGM proceed with the acquisition, a formal offer could materialize within days, based on the Wall Street Journal’s reporting. Currently, both parties remain in preliminary negotiations without finalized terms.

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