The ongoing saga surrounding the potential takeover of MGM Resorts International (NYSE: MGM) by People Inc. (NASDAQ: PPLI) may not be over, as one analyst believes Barry Diller’s media company could make another attempt to acquire the casino operator.
In a report released late on Thursday, Seaport Research Partners analyst Vitaly Umansky suggested that despite People retracting its $48.30 per share offer for MGM, Diller maintains a positive outlook on the gaming company’s future.
“In our view, it is possible that People comes back with another offer in the future,” wrote Umansky.
Umansky also anticipates that Diller’s company, which already holds around 27% of MGM shares, will continue to increase its ownership stake in the casino operator.
Numerous Variables at Play
People initially made their bid for MGM on June 1, proposing $48.30 per share valuing the company at $18 billion. While the offer was viewed as low by Wall Street, it was believed that financing complications, not concerns about MGM’s fundamental value, hindered the potential deal.
Fast forward to the present day, additional complexities have emerged, including speculation that MGM may be considering a bid for People to acquire the 27% equity stake held by the media conglomerate.
Although neither company has officially addressed these rumors, People’s stock has reacted positively, rising over 10% on heavy trading volume. Questions arise regarding MGM’s potential acquisition of People and how it would handle the media conglomerate’s assets.
Another factor to consider is MGM’s apparent preference to remain an independent public entity, as indicated by Chairman Paul Salem in a recent statement.
MGM Stock Undervalued
Following Diller’s initial bid, speculation circulated about other potential suitors for MGM. While no new bids materialized, the consensus remains that $48.30 per share undervalues MGM. The company itself believes that the public market does not accurately reflect its true worth.
Macquarie analyst Chad Beynon highlights that after excluding MGM’s interests in MGM China and BetMGM, the shares trade at a significant discount, representing a bargain for a company with premium assets in Las Vegas and a top-notch regional portfolio.
Beynon emphasizes that despite investor skepticism about the MGM Osaka project, the stock is trading at a discount compared to competitors like Boyd Gaming (NYSE: BYD), Las Vegas Sands (NYSE: LVS), Penn National Gaming (NASDAQ: PENN), and Wynn Resorts (NASDAQ: WYNN).