MGM Is Discussing a Bid for Its Own Largest Shareholder — One Day After That Shareholder Walked Away

MGM Resorts International is discussing making a bid to purchase Barry Diller's People Inc, the Wall Street Journal reported on Thursday — one day after People withdrew its own proposal to buy the casino operator. People's shares rose 9% after the bell.

The reversal took about 24 hours. On Wednesday, People pulled its $48.30-a-share, $18 billion-plus offer to take MGM private, sending MGM's stock down about 10%. On Thursday evening, the Journal reported that MGM could make its own proposal for People "in the coming days" — this time targeting the company that has been its largest shareholder for years.

The math that makes it plausible

People, formerly known as IAC, began building its MGM stake in 2020, when the casino operator's shares were battered by pandemic closures and travel restrictions. That stake — about 27% of MGM, or 66.8 million shares — is worth roughly as much as People's own market capitalization, according to the Journal. In effect, MGM would be buying back more than a quarter of itself, with a publishing business attached.

What MGM would actually be buying

People is a digital media and holding company that owns brands including People, Food & Wine, Southern Living and the Daily Beast. It has spent recent years streamlining its portfolio around its core publishing operations and its MGM investment, after Barry Diller identified the casino operator as undervalued and a way to diversify beyond media. Its second-quarter results last month pointed to improving profitability in publishing despite pressure on web traffic from AI-driven changes in search — though investors remained fixated on the value of the MGM stake.

Yesterday, in the other direction

Wednesday's collapse is what makes Thursday's report so striking. People had offered $48.30 a share in cash on June 1 for the MGM shares it did not already own, valuing the remainder at more than $18 billion. After months of talks with a special committee of independent MGM directors, Barry Diller pulled the bid: "We didn't feel the mix was coming together in the way we had hoped." He added that People remains "open to and interested in" a strategic transaction with MGM. MGM's board, through chairman Paul Salem, said it "remains excited to continue to lead MGM Resorts as a standalone company."

The coming days

Nothing is agreed. The Journal's report says only that MGM is discussing a bid and could propose in the coming days — and that the talks could still fall apart. MGM did not respond to a Reuters request for comment; People declined to comment. But the structure of a deal is already visible: with People's MGM stake worth nearly People's entire market value, a buyer is arguably paying little or nothing for the magazines. The question is what MGM thinks that publishing business — and control of its own shareholder register — is actually worth.

Twenty-four hours ago, Barry Diller decided MGM wasn't worth buying at $48.30 a share. Now MGM has to decide what Diller's company is worth — and whether buying its own biggest shareholder is the fastest way to take control of its own future.