MGM and People's Takeover Talks Come to an End

MGM Resorts International has ended the takeover talks it had been conducting with its largest shareholder, People Inc. Led by Barry Diller, People had made an offer to buy shares in MGM that it did not already own, but withdrew that offer in September. CEO Bill Hornbuckle confirmed on the third-quarter earnings call that the talks were over.

Hornbuckle said the two sides agreed on price, but People was unable to put together a financing consortium that met its goals. He said the purpose of the talks had been to reveal the value of the company's 25% stake.

Under the revised voting agreement, People, Diller and related parties will vote their shares in line with the board's recommendation in future change-of-control transactions. They also will not acquire shares that would take their combined ownership above 29.9%. MGM has also committed not to adopt special defensive measures against them as long as they comply with the arrangement.

Board chair Paul Salem said the agreement creates room to increase value through share buybacks and a possible change of control. The company has buyback authorization of more than $1 billion, but no shares were repurchased in the third quarter while the talks were ongoing.

In the third quarter, the company's revenue was $4.2 billion, down 1% year over year. Adjusted EBITDA fell 20% to $403 million. The net loss narrowed to $17 million from $285 million. Las Vegas revenue declined 2% to approximately $2 billion.