Earnings
Home›Earnings›Previews›MGM Resorts shares slide after People Inc. withdraws $…
MGM Resorts shares slide after People Inc. withdraws $48.30 bid
People Inc. pulled its offer on Sept. 23, and MGM stock later traded around $30.40 on Oct. 1, erasing more than the original takeover premium.
MGM Resorts International shares fell sharply after Barry Diller's People Inc. withdrew a $48.30 per-share takeover offer, a move analysts attributed to deal financing concerns rather than deteriorating business fundamentals, according to MarketBeat Ratings.
People Inc. had proposed the deal on June 1, and it represented about a 10% premium to MGM's May 29 closing price. Diller later walked away from the bid on Sept. 23, and the stock subsequently traded back below the levels seen before the announcement.
MarketBeat Ratings says MGM stock has round-tripped the takeover premium, and then some, with shares trading near $30.40 on Oct. 1. The outlet also notes the $48.30 offer was a 10.6% premium to People Inc.'s May 29 close, and about a 30% premium to MGM's 90-day volatility context.
Despite MGM reporting record second-quarter consolidated net revenues, the outlet argued that the sell-off narrative has been driven by noise around the potential transaction. MarketBeat Ratings said investors have been treating Diller's exit as a verdict on MGM's business, but the evidence points more toward a verdict on financing.