Chairman makes significant investment
Internet media giant InterActiveCorporation (IAC) has acquired a $1bn stake in MGM Resorts International, expressing particular interest in its online gambling business.
Shares of MGM Resorts jumped 25% after the announcement was made. Voicing his excitement at his company’s 12% stake in MGM, chairman and senior executive Barry Diller said IAC was attracted by “an area that currently comprises a tiny portion of its revenue – online gaming.”
an area that currently comprises a tiny portion of its revenue”
MGM president and CEO Bill Hornbuckle tweeted that IAG’s expertise was a “natural fit” for the casino resort company’s focus on enhanced sports betting and online gaming:
IAC has been on the hunt for deals after it completed its June spin-off of the Match Group, which included online dating site Tinder. The move fed $3.9bn cash into company coffers. The internet company’s 12% stake in MGM comprises common stock acquired in an open market transaction.
‘Once in a decade’ opportunity
In a letter to shareholders, Diller and MGM chief executive officer Joey Levin said the potential value of the investment was “too compelling to ignore […] a ‘once in a decade’ opportunity for IAC to own a meaningful piece of a pre-eminent brand in a large category with great potential to move online.”
too compelling to ignore”
The chairman of the MGM Resorts board of directors, Paul Salem, welcomed IAC on board, praising its prowess in both the entertainment and online commerce industries. He added that MGM would be taking “full advantage” of the company’s vast experience.
Market analysts also applauded the news. J.P. Morgan’s Wall Street analyst Joseph Greff said the acquisition validates MGM’s potential in the US’s growing iGaming and legal sports betting markets, particularly as resorts continue to experience the damaging effects of COVID-19. He added that the news “should migrate investors’ focus away from MGM’s near-term (slow) Las Vegas recovery to accelerating longer-term strategic opportunities.”
Beyond the pandemic
Levin and Diller said they believe MGM is in a strong position to recover from the pandemic. They anticipate Las Vegas will “roar back: a new NFL team, a new stadium, a drivable destination, and months of pent-up demand could drive a powerful resurgence.”
The letter also drew comparisons between MGM and Disney. It highlighted the latter’s advantage over pure-play streaming companies in terms of its brand presence and having numerous channels to monetize its intellectual property. MGM, it concluded, could also offer gaming consumers a daily “wider range of services, both physical and digital, than any competitor.”