Amendment comes as MGM reported a downturn on the Las Vegas Strip and at its regional casinos
MGM Resorts has announced an amendment to the existing voting agreement with People, which restricts them from purchasing additional shares once their ownership reaches 29.9 per cent and confirms that they will vote with the Board in connection with the change-of-control transaction.
Barry Diller’s People withdrew its $18bn takeover bid in September to buy MGM Resorts
Bill Hornbuckle, President & CEO of MGM Resorts International, said: “We believe this amended agreement aligns our largest shareholder, not only with our long-term strategic plan, but also with our ongoing commitment to maximizing value for all of our shareholders. The discussion between MGM and People ends there. Management continues to be focused on the business as clear and consistent. And today, you’ll hear that MGM Resorts has a focused operational approach, solid fundamentals and a compelling pipeline. We operate an unrivaled portfolio of offerings in Las Vegas and sports and entertainment capital of the world with globally recognised brands and experienced leadership team and well-capitalised resorts.”
The news came as MGM reported a downturn on the Las Vegas Strip and at its regional casinos with combined revenue of $4.2bn, showing a decrease of one per cent compared to the prior year’s quarter.
This resulted in a net loss attributable to MGM Resorts of $17m in the current quarter compared to a net loss attributable to MGM Resorts of $285m in the prior-year’s quarter.
On the Las Vegas Strip, revenue was $2bn in the current quarter, a decrease of two per cent compared to the prior-year quarter. The regions fared worse, down eight per cent, with revenue of $883m in the current quarter compared to $957m in the prior-year quarter, a decrease of 8%
“MGM Resorts remains highly focused on the successful operations of our businesses. Our trailing twelve months Las Vegas Strip Resorts Segment Adjusted EBITDAR has grown by nearly 70 per cent since calendar year 2019 and, while lower room rates during the third quarter impacted our results, October has rebounded favorably. Our diverse portfolio remains an advantage, with MGM China achieving 5% revenue growth and strong market share performance, while our digital businesses – including our BetMGM North America Venture and MGM Digital – reported strong topline growth during the third quarter,” said Hornbuckle. “MGM Resorts remains dedicated to our mission to be the world’s largest gaming and entertainment company with global integrated resorts, a leading digital presence, and, notably, an enviable growth pipeline with MGM Osaka to drive future value.”
“The amended voting agreement announced earlier today establishes a highly supportive framework that enables MGM Resorts to confidently pursue value-creating share repurchases as part of our ongoing commitment to enhancing shareholder value and driving longer-term growth,” said Jonathan Halkyard, Chief Financial Officer of MGM Resorts International. “The combination of our attractive stock valuation, the repurchase of nearly half of our outstanding share count over the past five years, and pivotal growth drivers – including our digital portfolio and MGM Osaka – positions the company as a premier long-term opportunity.”
“During the third quarter, our Las Vegas operations exhibited year-over-year growth in casino revenues of eight per cent, driven by a record 3Q slot win. High-end play continues to lead the way, driven by special programming like our second annual $5m slot tournament.
Halkyard added: “In Las Vegas, the decline in third quarter segment adjusted EBITDA was driven primarily by lower room revenues, which offset benefits from stronger casino revenues. We experienced an increase in mix from the leisure customer over the hot summer months, which resulted in pressured rates against similar occupancy that we had last year.
“Looking ahead to the fourth quarter, October is shaping up to be a solid month, and November will once again benefit from a robust Formula 1 calendar. In December, some normal group and convention rotation took place as anticipated and our sales teams are stepping up to secure incremental business to make that month.
“The regional operations’ third quarter saw same-store revenues increase by one per cent, driven by an all-time record quarterly slot win. Same-store slot drop and win both increased by four per cent, though were slightly offset by lower table games win.”