MGM Resorts ends takeover talks with largest shareholder People Inc

MGM Resorts International has terminated all acquisition discussions with its largest shareholder, People Inc. CEO Bill Hornbuckle announced the end of talks during the company's third-quarter earnings call on Wednesday. The decision follows People's withdrawal of its more than $18 billion takeover offer in September. The two companies have simultaneously amended their existing voting agreement, which now limits People's ownership stake in MGM to 29.9%. Hornbuckle explained that while the parties had agreed on a price, People could not assemble the necessary financing syndicate. "The discussion between MGM and People ends there," Hornbuckle said. "The dialog between us and People on you-buy-us-we’ll-buy-you was all about trying to unlock the value of that 25% of our shares. We’re done, and that’s our position. That’s People’s position." People, the investment firm led by Barry Diller, currently owns more than 26% of MGM's outstanding shares.

Under the revised pact, People and Diller must vote their shares in accordance with the MGM board's recommendation on any future change-of-control transaction. In exchange, MGM agreed not to take defensive measures against People and its affiliates as long as they adhere to the agreement's terms. MGM Chairman Paul Salem stated the arrangement gives the board clear options for maximizing shareholder value. "This agreement provides the Board with a clear path to maximize value through share repurchases and a change of control transaction, if applicable, in accordance with the Board’s fiduciary duties," Salem said.

The company emphasized that no further transaction is being considered by either side. MGM reported third-quarter revenue of $4.2 billion, a 1% decrease from the same period last year. The company's net loss improved significantly, narrowing to $17 million from $285 million a year earlier. Hornbuckle expressed optimism about the company's core markets despite noting challenges in Las Vegas from a 45% increase in airfares. Hornbuckle also commented on legislative efforts, stating MGM remains hopeful for iGaming legalization in Maryland and Virginia. He said Virginia came close to approval recently and described both states as potential significant contributors to future business. MGM Resorts shares closed at $27.26 on the Nasdaq, a decline of $0.73 or 2.6%.