Barry Diller’s People Inc. offers $48.30 for MGM; shares jump

People Inc., chaired by Barry Diller, offered $48.30 in cash for each remaining share of MGM Resorts, valuing the company at about $18 billion including debt. After the proposal, MGM shares rose about 14% to $50.13. Shares of People Inc. fell about 1.2%.

People Inc. currently holds a 26.1% stake in MGM. The nonbinding proposal would value MGM’s equity at roughly $12.4 billion and, if approved, would take the company private. Under the plan, People Inc. would own just over 50.1% of MGM and other investors would retain non-controlling minority stakes.

People Inc. said it expects to fund the purchase with a combination of cash on hand at both companies plus additional debt and equity financing. The company has held preliminary talks with potential equity partners and lenders.

Diller and former People Inc. chief executive Joey Levin both serve on MGM’s board. In a letter to the board, Diller wrote, “We continue to believe the market materially undervalues the power and durability of MGM’s assets,” and added that MGM’s businesses are not “currently realizing their full potential in the public markets.”

MGM owns more than a dozen properties on the Las Vegas Strip, six regional resorts in the U.S. and operations in East Asia. Diller has described MGM’s Las Vegas holdings as roughly 40% of the Strip. MGM’s digital businesses include BetMGM, the online sports-betting joint venture with Entain, which reported an 11% year-over-year increase in adjusted EBITDA in the first quarter.

Analysts said the offer establishes a baseline for MGM stock but could be the start of negotiations. Mizuho analyst Ben Chaiken wrote that the bid “puts a nice floor to the stock” but suggested the market might demand a higher premium if Las Vegas visitation and other fundamentals improve. Mizuho rates MGM Outperform with a $59 price target.

Market watchers will monitor whether MGM’s board engages with the proposal, whether financing partners and prospective minority investors back the structure, and whether higher offers emerge.