MGM Resorts International shares fell roughly 11% Thursday after Barry Diller’s People Incorporated abandoned its attempt to take the casino operator private, removing a takeover premium that had supported the stock since June. MGM traded near $33.60 during Thursday afternoon trading, putting the shares about 30% below the $48.30-per-share cash price People had proposed for the portion of MGM it did not already own.
The withdrawal ends several months of negotiations between People and a special committee of MGM’s board without producing a definitive merger agreement. MGM confirmed Wednesday that it will remain a standalone public company, while People said it continues to own 66.8 million MGM shares, or roughly 27% of the company, and remains interested in potentially pursuing other strategic arrangements in the future.
The market reaction effectively removes the value investors had been attaching to the possibility of a completed acquisition. MGM’s shares had jumped after the proposal was announced June 1, at one point trading above the $48.30 offer itself as investors considered whether negotiations might produce a higher price or another outcome. Thursday’s decline brings the stock back toward levels last seen before the takeover proposal emerged.
The $48.30 Offer Was Never a Binding Deal
People’s June proposal valued MGM at more than $18 billion and represented a 10.6% premium to MGM’s previous closing price, a 24.1% premium to its 30-day volume-weighted average price and more than a 30% premium to its 90-day average. People already owned 26.1% of MGM when the offer was announced and proposed buying the remaining shares for cash, arguing that MGM’s assets were not realizing their full value as a publicly traded company.
But the offer was explicitly non-binding. People disclosed in its second-quarter filing that it could modify or withdraw the proposal at any time and that neither side would have a legal obligation to complete a transaction until definitive documents had been signed. Barry Diller said Wednesday that the conditions needed to complete the transaction were not coming together as People had hoped, without identifying a single financial, financing or governance issue that caused the negotiations to end.
That distinction is important for understanding Thursday’s move. MGM is not losing contractual merger consideration or facing a termination of an agreed acquisition; investors are instead repricing the company after a possible $48.30 exit disappeared. People’s latest ownership filing also leaves the situation somewhat open-ended: the company said it intends to review its MGM investment continuously and could consider future acquisitions, dispositions or strategic transactions depending on MGM’s performance, share price and broader market conditions.
MGM’s Standalone Results Present a Mixed Picture
Without a near-term takeover catalyst, MGM’s operating results again become the primary basis for its valuation. The company generated a record $4.45 billion of revenue in the second quarter, up about 1% from a year earlier, while net income attributable to MGM increased to $292 million from $49 million. Adjusted EBITDA, however, declined to $610 million from $648 million, and adjusted earnings per share fell to $0.59 from $0.79.
Las Vegas Strip revenue rose 3% to $2.17 billion and segment adjusted EBITDAR increased 3% to $735 million, but the underlying numbers were uneven. Casino revenue jumped 17%, helped by a table-games win rate of 29.6% compared with 22.9% a year earlier, while room revenue declined 2%, average daily room rates fell 4% and revenue per available room also dropped 4%. That combination means part of the Strip improvement came from unusually favorable gaming results while hotel pricing remained softer.
Results elsewhere were similarly mixed. MGM China produced roughly $1.1 billion of quarterly revenue, approximately flat from a year earlier, while segment adjusted EBITDAR declined 15% to $257 million. MGM Digital grew revenue 20% to $196 million but posted a $31 million adjusted EBITDAR loss, compared with a $26 million loss a year earlier. BetMGM, the separately operated joint venture with Entain, was more encouraging: second-quarter net revenue increased 3% to $711 million and adjusted EBITDA reached $74 million, although management said full-year revenue and EBITDA were tracking toward the lower end of its existing guidance ranges.
MGM’s board is pointing to that diversified portfolio as the basis for remaining independent, highlighting its Las Vegas and regional casino businesses, BetMGM, MGM China and the MGM Osaka development scheduled to open in 2030. The company also retains a major shareholder with extensive influence: People still controls approximately 66.8 million shares even after abandoning the buyout, meaning future strategic discussions cannot be ruled out simply because the June proposal has been withdrawn.
For now, however, MGM has lost the clearest catalyst that separated its share price from the performance of the underlying business. The next earnings report will put renewed attention on whether Las Vegas hotel demand and pricing improve, whether MGM China can restore earnings growth, and whether BetMGM’s increasing profitability can become a larger contributor to MGM’s value. With the $48.30 cash offer no longer providing an acquisition reference point, those operating trends will have considerably more influence over where investors value MGM next.