MGM Resorts International got a huge boost after Fox Broadcasting founder Barry Diller invested $1B in the gaming giant.
Diller’s IAC/Interactive said on Monday that it had bought a 12% stake in the MGM Resorts International. In a letter to the shareholders, Diller wrote that the gambling operator’s online gaming business was initially what attracted him. Said Diller:
“We believe MGM presented a ‘once in a decade’ opportunity for IAC to own a meaningful piece of a preeminent brand in a large category with great potential to move online.”
Interest In Online Gaming Business
Diller added that he has followed the online gaming business for a while and his company has been looking for a venue to enter the $450B industry. MGM’s online gaming business comprises just a small portion of its revenue but in his letter, Diller said that it is poised to thrive and develop.
“MGM also is an aspirational brand, which could be delivered with daily accessibility and offer gaming consumers (including the 34 million M-life Rewards members) a wider range of services, both physical and digital, than any competitor.”
MGM Resorts and the U.K. based sports betting giant GVC Holdings partnered to form Roar Digital in 2018, with each company investing $100M. Their product is the BetMGM app which is currently live in seven states and is expected to be available to a total of 11 by the end of 2020.
Last July MGM and GVC put in an additional investment totalling $250M. BetMGM’s progress has lagged but it is expected to accelerate, especially with IAC coming up with a $1B investment in MGM.
MGM’s Shares Soar
Diller’s purchase comes at a time when when the gambling industry has been severely affected by the government restrictions due to the COVID-19 pandemic and the people’s fears about mass gatherings.
MGM saw its entire U.S. fleet of two dozen resorts in six states close at the onset of the coronavirus pandemic last March. All of its regional casinos have reopened except Empire City in New York while only The Mirage and Park MGM in Las Vegas are still closed.
MGM shares, which are traded in the New York Stock Exchange, closed up $2.62, 13.8% on volume or more than two-and-a-half times the daily average on the news of the deal. It retreated by $20 cents, 0.9 percent to end at $21.45 per share. Early trading saw the shares peak at $23.76 per share.
IAC acquired more than 59 million shares of MGM Resorts International over a nine-week period starting from the start of June 2020. The $1B purchase took some 34 stock transactions to be complete.
The 78-year old Diller founded Fox Broadcasting Co. and USA Broadcasting. He is currently ranked 168 in the Forbes 400 list with a net worth of $3B. Diller founded IAC in 1995 and is also the chairman of online travel titan Expedia, which acquired its holding company Liberty Expedia in 2019 for $2.6B.
IAC is a New York-based investment company with vast experience in media and online commerce. The portfolio of IAC includes Vimeo, Dotdash, and Care.com. It also owns a majority stake in ANGI Homeservices whose products include HomeAdvisor, Handy, and Angie’s List.