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MGM Resorts International has reached an agreement limiting the ownership and voting power of Barry Diller’s People Incorporated, its largest shareholder. The agreement caps ownership at 29.9%.
The deal follows People Inc.’s withdrawn takeover bid. MGM CEO Bill Hornbuckle said takeover discussions had ended.
MGM owns casinos throughout the U.S. and also operates online casino and sports betting through its BetMGM joint venture with Entain.
Ownership Cap and Voting Restrictions
People Inc. holds a 26.5% interest in MGM. The ownership limit covers People Inc., Diller and their controlled affiliates.
Securities that People Inc. own above 25.73% of MGM’s total voting power must follow the majority’s vote. In a change-of-control transaction, the group must vote securities above that threshold in line with the board’s recommendation, the outlet reported.
The ownership cap includes an exception for MGM share repurchases, according to Asia Gaming Brief. Buybacks can push the group’s stake above 29.9%, but the group must then refrain from further on-market acquisitions, the outlet reported.
MGM Also Limits Defensive Measures
MGM agreed not to adopt shareholder-rights plans or other defensive measures primarily intended to disadvantage Diller and People Inc., Asia Gaming Brief reported. The outlet said exceptions apply to proxy contests and other contested shareholder solicitations.
MGM retains the ability to act against third parties buying significant stakes from the group. The group must notify MGM before completing such a sale, the outlet reported.
MGM Chairman Paul Salem said the agreement gives the board a path to pursue share repurchases and a possible change-of-control transaction.
Casino.org reported that Hornbuckle addressed the ended takeover discussions during MGM’s third-quarter earnings call. “It was all about trying to unlock the value of that 25% of our shares, we’re done,” Hornbuckle said.
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Sources: As reported by Asia Gaming Brief and Casino.org.
