MGM Resorts Ends Merger Talks With Barry Diller’s People Inc.
MGM Resorts and People Inc. call off an $18 billion buyout deal after failing to secure financing, finalizing a new voting pact capping stakes at 29.9%.
Stock photo for illustration only, not from the actual event
- MGM Resorts and People Inc. have officially ended all merger and acquisition talks.
- An $18 billion take-private offer collapsed due to financing syndicate issues.
- A new voting pact limits People Inc. to a maximum stake of 29.9% and board alignment.
- CEO Bill Hornbuckle stated that pricing terms were met before the deal fell through.
MGM Resorts has officially closed the door on merger talks with its largest shareholder, Barry Diller's People Inc., after the two companies signed an amended voting agreement disclosed in a Wednesday filing with regulators.
The buyout discussions began on June 1 when People Inc., formerly known as IAC, submitted a take-private offer to acquire MGM Resorts for $48.30 per share in cash. This represented a 10.6% premium and valued the transaction at approximately $18 billion, with People arguing that public markets had undervalued the leisure operator.
Stock photo for illustration only, not from the actual event
However, MGM Resorts CEO Bill Hornbuckle revealed during an earnings call that while both sides successfully agreed on pricing terms, People Inc. was unable to assemble a financing syndicate and ultimately withdrew its offer in September.
Under the terms of the newly amended voting agreement, People Inc. and Diller are required to vote all of their MGM Resorts shares in accordance with board recommendations on any change-of-control transaction, while agreeing not to raise their stake above 29.9%. In exchange, MGM has agreed to refrain from taking defensive measures or adverse actions against People or Diller.
"We came to terms on price, but People could not assemble a financing syndicate."
Bill Hornbuckle, CEO of MGM Resorts
Asked about a Wall Street Journal report indicating that MGM had considered bidding for People Inc. in return, Hornbuckle explained that the back-and-forth discussions were aimed at unlocking the value of People's roughly 25% stake, confirming that all reciprocal talks are now completely finished.
The collapse of the MGM Resorts buyout highlights ongoing credit market hurdles for mega-scale leveraged buyouts, even when buyer and target agree on valuation. Tight debt financing conditions continue to threaten leisure sector take-private bids. Meanwhile, the new governance pact provides stability by preventing hostile proxy moves and capping the largest shareholder's influence while MGM refocuses on operational performance.
Source: Skift
Found something wrong in this article? Report an issue with this article
Comments
Leave a Comment