MGM Weighs Bid for Barry Diller's People Inc, Its Largest Shareholder, After People Dropped Its Own Offer

MGM is discussing a bid for People Inc, the media company controlled by Barry Diller, according to a Wall Street Journal report. The twist is the direction of the deal: People Inc, formerly IAC, is MGM's largest shareholder with a stake of about 27%, and it had itself been trying to take MGM over until it withdrew that proposal a day earlier. If MGM decides to proceed, it could make its proposal in the coming days, according to people familiar with the matter cited by the Journal.

People Inc's original offer was $48.30 a share in cash for the MGM shares it did not already own, a premium of about 10.6% to MGM's close of $43.67 at the time, valuing the casino operator at more than $18 billion. In walking away, Diller said the mix "was coming together" differently than hoped, while adding that People remains "open to and interested in the possibility of a strategic transaction with MGM Resorts". MGM shares fell about 11% on September 24 after the withdrawal, per CNBC.

The economics explain the interest. People Inc's MGM stake, which Diller began building in 2020 when casino shares were battered by pandemic closures, is valued at nearly the same amount as People Inc's own market capitalization. Buying People Inc would give MGM its largest block of shares back along with publishing brands such as People, Food & Wine, Southern Living and the Daily Beast. People shares rose 9% after the bell on the report.

The situation remains fluid. A GGRAsia headline citing Seaport says People Inc could return with a new bid for MGM, though the article body could not be reviewed. Watch for whether MGM formally makes a proposal, how it would treat the publishing assets it has no operating history with, and how People Inc's board responds.