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State of Play’s TL;DR
- MGM Resorts International CEO Bill Hornbuckle said takeover discussions with People Inc. have ended.
- MGM’s amended voting agreement caps People Inc.’s ownership of MGM equity at 29.9%.
- People Inc. previously withdrew an $18 billion takeover bid of MGM.
MGM Resorts International CEO Bill Hornbuckle said the casino operator is finished with takeover discussions involving its largest shareholder, People Inc., according to Casino.org.
Hornbuckle made the comments during MGM’s third-quarter earnings call, following the announcement of an amended voting agreement earlier that day.
“The discussion between MGM and People ends there. Management continues to be focused on the business as clear and consistent.”
People’s stake gets a 29.9% ceiling
The amended agreement caps People’s ownership of MGM equity at 29.9%. People already holds more than 26% of MGM’s outstanding shares, making it the company’s largest shareholder.
The agreement also provides a path for People to approve a future takeover of MGM by another party.
People withdrew its $18 billion bid for MGM last month amid deal complexities. After the original merger talks collapsed, People owner Bill Diller expressed interest in a future strategic transaction with MGM.
Analyst sees an end to a stock-market distraction
Texas Capital analyst David Bain said the terminated discussions and revised voting agreement could help remove an overhang on MGM shares.
In a note cited by Casino.org, Bain described a theoretical two-step transaction: acquiring MGM shares through a purchase of People, then selling assets.
Bain said the structure’s complexity, uncertain execution timeline, and shifting transaction premiums may have contributed to a persistent valuation discount for MGM shares.
“In our opinion, terminated discussions and an amended voting pact capped at 29.9% removes a structural distraction.”
Based on reporting by Casino.org.
