Sept 24 (Reuters) – Shares of MGM Resorts slid 10% on Thursday after media mogul Barry Diller’s People Inc withdrew its more than $18 billion proposal to buy the casino operator.
At $34 in premarket trading, MGM’s stock was on track for its lowest open in seven months, if losses hold. The slump was set to wipe out all gains made since People, which already owns 27% of MGM, offered to buy the remaining shares for $48.30 apiece in June.
Analysts said they were not surprised. Investor enthusiasm around the offer had been gradually waning, signaled by a 27% decline from the 18-year high it hit in June through the last close.
“We did not believe a $48/share bid was going to entice the MGM board and there did not appear to be much appetite from People Inc. (in our view) to move materially above $48,” Mizuho analysts wrote in a note on Thursday.
Truist Securities said the stock’s tumble after the withdrawal could reflect some event-driven exits.
In June, analysts were broadly positive after the proposal was announced. Truist had said MGM Resorts, as a part of People, “could potentially operate better under less short-term focused investor scrutiny.”
The casino operator’s growth has been uneven, with its top market, the US, facing sluggish footfalls, while its digital operations and assets in China, including Macau, have performed well. MGM owns marquee properties that account for roughly 40% of the Las Vegas Strip.
People did not provide a specific reason for withdrawing the deal, although Diller said, “We didn’t feel the mix was coming together in the way we had hoped.”
This was the second take-private offer for a casino operator this year, following hospitality billionaire Tilman Fertitta’s agreement to buy out Caesars Entertainment in May.
For Diller’s group, known for iconic brands such as People magazine and Travel + Leisure, the deal would have allowed People to expand beyond its traditional media operations.
Shares of People Inc were little changed before the bell.
(Reporting by Nandan Mandayam in Bengaluru; Editing by Leroy Leo)
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