Key highlights:

  • People Incorporated has dropped its $18 billion plan to take MGM Resorts International private.
  • Barry Diller said things just weren’t coming together as planned, but People Incorporated is still holding its 66.8 million MGM shares, which is around 27% of the company.
  • After news broke that the deal was off, MGM’s stock declined from about $38 on September 23 to $32 by Monday.
  • A new deal is still possible. Reports say MGM Resorts is considering buying out People Incorporated and some of its other assets.

Barry Diller’s People Incorporated has ended its $18 billion plan to buy MGM Resorts International and take the casino giant private. Diller, chairman and senior executive of People Incorporated, originally wanted to buy more MGM shares to gain controlling ownership; he aimed for 50.1%. So, for now, that proposal is over.

However, the end of the original deal does not necessarily mean discussions between the two companies are finished. People Incorporated says it’s still interested in some kind of strategic deal with MGM Resorts. And according to The Wall Street Journal, MGM might even be thinking about acquiring People Incorporated instead.

People Incorporated Calls Off MGM Takeover

People Incorporated made it official: the bid to take MGM Resorts private is off. Diller said too many elements were involved in making a deal that big, and things just did not come together the way they hoped. Originally, back in June, People Incorporated announced plans to buy more MGM shares. The company already owns 66.8 million, or about 27%. If Diller had succeeded, he would have gained a controlling stake and a big say in how the casino company runs.

The deal would not have just given Diller more leverage in MGM’s casino business. It would also have given him more control over BetMGM, the online gambling company MGM and Entain co-own. BetMGM runs sports betting, casino games, and poker in U.S. states where it is legal. Although the buyout fell through, Diller said he still believes in MGM. He says People Incorporated remains confident in MGM’s future, its leadership, and its potential. For now, People Incorporated still holds its 66.8 million MGM shares, keeping the same 27% stake, even though it is no longer seeking majority control.

MGM Stock Falls after Deal Ends

As soon as the deal ended, MGM Resorts’ stock price fell. Reports showed MGM stock dropped from about $38 on September 23 to $32 by Monday, right after everyone learned the buyout was off. MGM’s huge debt, over $30 billion, according to CNBC, did not help. That kind of financial baggage made the deal much harder to pull off.

So, People Incorporated would not be buying more shares, at least for now. And MGM Resorts will stay a public company and keep operating just as it has been. All this happens as major moves unfold across the casino industry. Just a day before the MGM news broke, Caesars Entertainment’s board approved the sale of the company to Tilman Fertitta, who owns Golden Nugget casinos.

A Possible Reversal Could Change the Deal

Even though People Incorporated says it is stepping away, there is still a chance for another type of deal. The Wall Street Journal reports MGM Resorts might actually be looking to buy People Incorporated. That would change everything; MGM would end up acquiring the company that just tried to acquire it.

If that happens, MGM might buy back a big part of its own shares now held by People Incorporated, or maybe even take up some of People Incorporated’s other businesses. What else does People Incorporated own? Magazine brands, healthcare businesses, and Turo, the car-sharing platform, among others.

Diller says he is open to new conversations. He said People Incorporated still wants some kind of strategic deal with MGM Resorts and is willing to consider different options. So, the situation remains wide open. The $18 billion plan to take MGM private is off the table, but the two companies could still find another way to work together.

Caesars Deal Adds to Casino Industry Activity

While all this has been happening with MGM, another huge deal is underway in the casino industry involving Caesars Entertainment. Caesars’ board just approved a $17.6 billion sale to Tilman Fertitta. The deal includes $5.7 billion in cash, and the rest comes from taking on about $12 billion in Caesars’ debt.

These are two separate deals with two big companies, but both show just how much change and how much money is moving around in the casino world right now. Even though People Incorporated is backing away from taking over MGM Resorts, nobody has ruled out another major deal between the two.