Seaport Analyst Suggests Barry Diller May Revive Takeover Bid for MGM Resorts

Seaport Analyst Suggests Barry Diller May Revive Takeover Bid for MGM Resorts

Overview: A Corporate Saga That Refuses to End

The ongoing drama surrounding MGM Resorts International (NYSE: MGM) and People Inc. (NASDAQ: PPLI) — the media company controlled by billionaire Barry Diller — may be far from concluded. According to a recent analysis from Seaport Research Partners, Diller could launch a second bid for the casino giant after his initial offer was withdrawn. This article explores the key players, the financial stakes, and what might happen next.

Key Facts at a Glance

• Initial Offer: $48.30 per share from People Inc. for MGM (announced June 1, valued at $18 billion)
• Current Stake: People Inc. already owns approximately 27% of MGM shares
• Withdrawal Date: People Inc. pulled its acquisition offer on Wednesday
• Analyst View: Seaport’s Vitaly Umansky expects Diller to potentially return with a new offer
• MGM’s Stance: Chairman Paul Salem indicated the company is content as a standalone public entity

The Analyst’s Perspective: Why a Second Bid Makes Sense

In a research report published late Thursday, Seaport Research Partners analyst Vitaly Umansky offered a detailed assessment. He noted that despite People Inc. withdrawing its $48.30 per share offer, Diller remains “very optimistic” about MGM’s long-term prospects.

Key Observations from Umansky

• “In our view, it is possible that People comes back with another offer in the future.”
• Diller’s company is expected to continue increasing its stake in MGM beyond the current 27% holding.
• The withdrawal appears driven by financing complexities, not doubts about MGM’s underlying business strength.

What This Means for Investors

Umansky’s analysis suggests that Wall Street may have underestimated Diller’s persistence. If Diller remains bullish on MGM’s assets — including its Las Vegas Strip properties, regional casinos, and stakes in MGM China and BetMGM — a revised offer could emerge once financing issues are resolved.

The Initial Bid: What Went Wrong?

People Inc. made its original bid on June 1, offering $48.30 per share, which valued MGM at approximately $18 billion. However, the offer faced significant headwinds:

Why the Offer Was Considered Low

• Market Reaction: Wall Street viewed the price as inadequate, given MGM’s premier real estate portfolio and growth potential.
• Valuation Gap: MGM’s assets, including its 56% interest in MGM China and 50% stake in BetMGM, were seen as undervalued in the bid.

Financing Complexities

• The primary obstacle was not MGM’s fundamentals but rather the difficulty in securing financing for the deal.
• Diller’s media company, while influential, may have struggled to structure a deal that satisfied lenders and regulators.

New Twists: Could MGM Acquire People Inc. Instead?

Recent rumors have added a dramatic new layer to the saga. Speculation is mounting that MGM might consider acquiring People Inc. to reclaim the 27% of its equity held by Diller’s firm. This potential reverse takeover would represent a bold strategic move.

Implications of a MGM-People Deal

• Asset Ambiguity: It remains unclear what MGM would do with People Inc.’s diverse media holdings, which include digital platforms and publishing assets.
• Stock Reaction: Shares of People Inc. surged more than 10% on heavy midday trading volume following the rumor, indicating market excitement about a possible buyout.
• Strategic Logic: Some analysts argue that MGM might prefer to own its shares outright rather than remain under partial control of an activist-like investor.

MGM’s Official Position

In a statement released Wednesday, MGM Chairman Paul Salem emphasized that the company is “content to remain a standalone public company.” This comment suggests MGM is not actively seeking a sale or merger at this time.

Valuation Analysis: Why MGM Looks Undervalued

Despite the bid drama, MGM’s stock continues to trade at what analysts describe as a “striking discount” relative to its intrinsic value. Here’s a breakdown of the numbers:

Stripping Out Non-Core Assets

Macquarie analyst Chad Beynon provided a compelling valuation exercise:

Key Finding: When excluding MGM’s stakes in MGM China and BetMGM, the remaining shares trade at just 3.7x 2026 EBITDA — an extremely low multiple for a company with top-tier assets.

Comparative Valuation

Beynon also noted that MGM trades at 4.7x estimated 2027 EBITDAR, a metric that accounts for rent and restructuring costs. This implies a discount to key competitors:

• Boyd Gaming (NYSE: BYD)
• Las Vegas Sands (NYSE: LVS)
• Penn Entertainment (NASDAQ: PENN)
• Wynn Resorts (NYSE: WYNN)

“The market is assigning basically no value for MGM’s Osaka project in Japan,” Beynon added, referring to the company’s planned integrated resort development.

What’s Next? Three Possible Scenarios

Scenario 1: Diller Returns with a Higher Bid

• Probability: Moderate to High
• Catalyst: Resolution of financing issues; Diller remains optimistic about MGM’s future.
• Impact: Could force MGM’s board to reconsider or trigger a bidding war.

Scenario 2: MGM Acquires People Inc.

• Probability: Low to Moderate
• Catalyst: MGM wants to eliminate the overhang of Diller’s stake.
• Challenges: MGM would need to explain why it wants media assets; potential regulatory hurdles.

Scenario 3: Status Quo Continues

• Probability: Moderate
• Catalyst: Both parties decide that independence is the best path.
• Impact: MGM focuses on organic growth; Diller continues accumulating shares.

Conclusion: A Story Still Unfolding

The MGM-People Inc. saga is far from over. With Barry Diller’s persistence, MGM’s undervaluation, and the possibility of a reverse takeover, investors should stay alert. The next move could reshape the landscape for both companies.

Key Takeaways for Readers

• For MGM Shareholders: The stock’s discount suggests potential upside if a deal materializes or if the market re-rates the company.
• For People Inc. Shareholders: The rumored buyout could provide a premium exit, but risks remain.
• For Industry Watchers: This battle highlights the growing intersection of media and gaming assets.

Related guides

• $1.35B Mega Millions Winner Drops Lawsuit: The Cost of Anonymity in a Record Jackpot
• $167M Powerball Winner Arrested for Fifth Time: A Cautionary Tale of Sudden Wealth
• $20 Ticket Turns into a $2M Payout in Illinois
• $320M Powerball Hopeful John Cheeks Still Fighting for Website Error Jackpot: A Comprehensive Guide to the Ongoing Legal Battle
• $4.6M Child Modeling Fraudster Blew Stolen Cash on Gambling, Taylor Swift Tickets