MGM Resorts and Barry Diller amend voting agreement after dropped takeover bid

MGM Resorts International and Barry Diller’s People Inc. have amended a voting agreement struck earlier this year, potentially opening the door for Diller to sign off on an acquisition of MGM by another suitor, the companies announced.

News of the fresh voting pact emerges about a month after Diller’s media company dropped an $18 billion takeover bid of MGM, according to the operator.

Ownership and share limits

Diller’s company initiated its position in MGM in August 2020, controlling 12% of the gaming company, MGM said. Through additions to that stake and MGM’s prolific share buyback activity, Diller now owns more than 26% of MGM equity, making People the largest MGM shareholder, the operator said.

Under the amended agreement, the covered entities have agreed not to purchase additional shares of MGM Resorts if doing so would result in their aggregate ownership exceeding 29.9% of the company’s outstanding shares, according to MGM.

Terms of the agreement

For so long as the covered entities remain in compliance with the agreement, MGM Resorts has agreed not to take defensive measures or actions designed to be adverse to the covered entities, the operator said.

MGM made clear the new voting agreement doesn’t obligate it or People to “enter into any transaction and none is contemplated,” according to the company.

Paul Salem, chairman of the MGM Resorts board, said the agreement provides the board with a clear path to maximize value through share repurchases and a change of control transaction, if applicable, in accordance with the board’s fiduciary duties.

MGM’s stock is off 22.6% year-to-date, the operator said.