Media mogul's MGM retreat dodges risky China wager
MGM•People withdrew its proposal to buy the 73% of MGM Resorts it does not already own, a deal that valued the casino operator’s enterprise at $18 billion. People retains its 27% stake in MGM.
1. Offer withdrawn
People chair Barry Diller’s proposal to buy the remaining 73% of MGM Resorts has been withdrawn. The offer, made public on June 1, valued MGM’s enterprise at $18 billion.
2. Macau exposure
About one-quarter of MGM’s revenue comes from Macau, which has faced tighter Chinese restrictions on offshore wealth and travel. Macau gambling revenue is expected to grow 5% this year, down from analysts’ earlier forecast of more than 7%. MGM China’s adjusted EBITDAR fell 15% year over year to $257 million in the quarter ended in June.
3. Trading moves
People shares rose nearly 4% in after-hours trading on Wednesday, while MGM Resorts fell nearly 11% to $33.70, nearly one-third below the offer price. Diller said People remains interested in a possible strategic transaction with MGM and will consider alternatives.
