MGM Resorts International announced in a filing to the Securities and Exchange Commission (SEC) that the digital media and internet services company InterActiveCorp (IAC) has increased its stake in the business.
Buying when the Market Is Down
According to the regulatory filing under Schedule 13D/A, the business led by mogul Barry Diller has been actively purchasing shares in MGM Resorts between August 11-23 and spent around $41.7 million in new company stock to increase its stake to 16.5%.
IAC’s move to up its stake in the gaming and entertainment business came during times when MGM Resorts’ shares dropped significantly from the $45-$48 range at the beginning of the year to the $27-$35 range in July and August.
IAC CEO Joey Levin hinted at the upcoming purchases of MGM Resorts’ stock in a shareholder letter on August 9 in which he outlined the solid consumer demand at MGM Resorts properties coming from the leisure consumer segment. Levin also pointed to the all-time high average daily room rates in Las Vegas.
Levin commented on the company’s investment in MGM Resorts during IAC’s earnings call in May, outlining that “the online gaming business … has outperformed” the company’s expectations, showing tremendous growth that is likely to continue in the future.
History of Share Purchases
IAC started buying shares at MGM Resorts in August 2020 when it accumulated a 12% stake valued at around $1 billion. At the time, Diller commented that IAC found itself with cash to burn after the separation of Match Group from the business and pursued the investment in MGM Resorts considering it as a leading operator in a gathering speed online gaming and betting industry.
In January this year, IAC proposed to increase its investment in MGM Resorts and provide financial support for the company to fund its bid to acquire its partner in BetMGM Entain. A few days earlier, MGM had tabled over $11 billion to acquire the British gaming group but Entain considered the bid significantly undervalued the company’s worth.
IAC increased its shareholding at MGM Resorts in February when the media business and MGM Resorts announced they would each purchase a total of 4.5 million shares to the aggregate amount of $405 million from hedge fund Corvex Management. IAC acquired $202.5 million worth of stock as part of their agreement and upped its shareholding to 14.4%