MGM Resorts International is continuing to evaluate a takeover proposal from Barry Diller’s People Incorporated as Q2 revenue increased by 1% to a record $4.5bn.
People Inc. submitted a non-binding offer in June to acquire the 73.9% of MGM it does not already own for $48.30 per share in cash. The proposal values MGM at more than $18bn including debt and represents a 10.6% premium to the company’s share price immediately before the offer. People Inc. expects to control just over 50.1% of MGM following any transaction, with other investors retaining minority interests.
Bill Hornbuckle, President & CEO of MGM Resorts, says: “I am confident our Board will pursue the course of action that is in the best interest of the company and our shareholders.”
MGM has established a special committee of independent Directors and advisers to review the proposal. Diller, who serves on MGM’s Board, has recused himself from discussions relating to the potential transaction.
MGM generated net income of $292m during the three months to June 30th, compared with $49m during the corresponding period last year. Adjusted EBITDA declined by 6% to $610m, while adjusted earnings per share fell from $0.79 to $0.59. Las Vegas Strip revenue increased by 3% to $2.2bn.
Casino revenue grew by 17% to $536m, supported by a higher table games win percentage. Table games drop declined by 2%, while slot handle remained broadly unchanged. Room revenue fell by 2% to $717m as the average daily room rate declined by 4% to $242. Occupancy remained at 93%.
Regional revenue decreased by 4% to $924m following the sale of MGM Northfield Park in Ohio. Revenue from properties retained throughout both reporting periods increased by 3% to a quarterly record of $904m. MGM China revenue remained broadly unchanged at $1.1bn, although adjusted EBITDA declined by 15% to $257m.
MGM Digital, which includes LeoVegas but excludes BetMGM, increased revenue by 20% to $196m.
Hornbuckle adds: “MGM Resorts once again demonstrated the strength of our diversified portfolio with record Q2 consolidated revenue.”
