MGM Resorts International saw its stock price jump by approximately 16% on Monday following a proposal from Barry Diller's People Inc. to acquire the company in an all-cash deal at $48.30 per share.
Diller, who also serves on MGM's board, stated he would recuse himself from any board discussions or decisions regarding the proposal. People Inc., formerly known as IAC, currently holds about 26.1% of MGM's outstanding common stock. If the transaction is completed, People Inc. would obtain just over 50.1% ownership of MGM, with other investors retaining a minority stake.
In a statement outlining the rationale for the offer, Diller said, "We began investing in MGM about six years ago because we believed it was a rare business: it owns physical assets that cannot be easily replicated or replaced by AI, while also having outstanding digital growth opportunities." He added that MGM's assets are significantly undervalued by the market, the management team is excellent, and there is a prime opportunity to support its next phase of growth and help unlock its full value.
According to Morgan Stanley, the proposed acquisition price implies a valuation of about 7.7 times the consensus 2026 EV/EBITDAR estimate. The offer is not subject to a financing condition but requires limited antitrust and applicable gaming regulatory approvals. Diller also stated that People Inc. would not sell its existing MGM shares nor would it propose or vote for any transaction that would result in a change of control to another party.
People Inc. first took a stake in MGM in 2020. Over the past five years, MGM's stock performance has been lackluster, rising only 2% since mid-2021, compared to an 80% gain for the S&P 500 over the same period. The buyout offer represents a 24.1% premium to MGM's 30-day volume-weighted average price as of May 29 and a premium of over 30% to its 90-day average price.
MGM operates some of the most iconic properties on the Las Vegas Strip, including the Bellagio and the Aria Resort & Casino. The company recently reported its fiscal first-quarter 2026 results, with revenue of $4.45 billion beating expectations of $4.36 billion, although earnings per share of $0.49 fell short of the $0.56 consensus estimate.
Concurrently, several Wall Street firms adjusted their stances on the stock. Morgan Stanley maintained an Underweight rating with a $35 price target. However, Truist Securities upgraded the stock to Buy, citing increased confidence in the Las Vegas Strip's outlook, and JPMorgan raised its rating from Neutral to Overweight.