ShareMGM Resorts International has initiated a large share repurchase with its main stakeholder. InterActiveCorp (IAC), a US-based media and technology firm, will assist MGM in acquiring 4.5 million of its common stock. The pact with Corvex Management would cost each of them roughly $202.5 million, equivalent to $45 per share.
The announcement comes seven months after Corvex filed a Form 13F with the SEC. During the second quarter of 2021, the fund manager increased its holding in MGM to 15.67 million shares. The casino company had a lot of institutional investors at the time. These included Vanguard, BlackRock, and State Street, but MGM was their most significant.
IAC's shareholding in MGM will grow to 14.4 percent after the buyout. According to the firm's August 2020 transactions, it already owned a 12 percent share in the gaming enterprise.
The deal is expected to be closed on Wednesday as part of MGM's $3 billion buyback program, announced in February 2020. Alongside this recent agreement, a total of $636.7m stands as part of this project.
Long Term Goals
According to MGM Resorts International treasurer and chief financial officer Jonathan Halkyard, the repurchase is "a monument to our confidence in the long-term direction of our company" and "reflects our commitment to our capital allocation plan."One of the company's objectives is to maintain a healthy balance sheet while also giving some cash to its investors. As per Halkyard, the buyback demonstrates its confidence in its shares.
Impressive Performance
Since the beginning of the COVID-19 epidemic, MGM Resorts has made a tremendous turnaround. According to data released last week, MGM's fourth-quarter net income grew by 105% year over year to $3.1 billion. During the first quarter of 2020, net income was $131 million, while MGM Resorts reported a loss of $448 million.The company's assets on the Las Vegas Strip did exceptionally well. In the fourth quarter of 2021, they earned $1.8 billion in sales, a 26 percent increase over the fourth quarter of 2019. A few of the factors for the good fourth quarter include the relaxation of pandemic limitations, as well as MGM's purchase of the Vdara and Aria resorts.
MGM Resorts' net revenue for the whole year was $9.7 billion, an 88 percent increase from 2020. In 2020, the net income was $1.3 billion, compared to a net loss of $1 billion. One of the firm's goals for the future is to extend its BetMGM iGaming and sports betting trademarks. The corporation has aspirations to grow outside of the United States, including constructing an integrated resort in Japan.
