IAC Buys $1 Billion Stake in Casino Giant MGM
Media conglomerate IAC has bought a nearly $1 billion stake in Las Vegas-based global casino and hospitality giant MGM Resorts International in the company’s boldest purchase this year and particularly after spinning off its stake in Tinder-owner Match in July.
MGM jumped 25% on Monday on news that IAC took what amounts to a 12% stake in the casino resort operator.
IAC Chairman Barry Diller said in a letter to shareholders that their investment in MGM was “once in a decade opportunity” and that what really attracted them to MGM was “an area that currently comprises a tiny portion of [MGM’s] revenue – online gaming.”
Up until a few years ago, MGM was primarily focused on its portfolio of land-based casino resorts across the United States and Macau. With the legalization of online casino-style gaming in several states and the annulment of a federal ban on sports betting in 2018, the company has been looking to grow its footprint in the digital gambling space.
MGM’s focus on online gambling will certainly continue to grow as brick-and-mortar casinos around the world have been struggling to fend off the effects of the Covid-19 pandemic, while more and more states have been moving to embrace digital betting and iGaming.
A Unique Opportunity
On their latest purchase, IAC CEO Joey Levin said that MGM presents “a unique opportunity” for his company to own “a meaningful piece of preeminent brand in a large category with immense potential.”
Mr. Levin added that their plans include to remain a minority investor and a “long-term strategic partner” of MGM.
MGM Chairman Paul Salem pointed out that IAC can help the casino operator continue to grow its online sports betting and gaming businesses.
As for MGM’s land-based business, Mr. Diller said that the company’s casino resorts are well positioned to bounce back once the coronavirus crisis subsides and noted that the company’s free cash flow over the next 10 years could exceed its current valuation.
The billionaire businessman dwelt further that they believe MGM is an “aspirational brand, which could be delivered with daily accessibility and offer gaming consumers a wider range of services, both physical and digital, than any competitor.”
Mr. Diller also pointed out that MGM through its partnership with Isle of Man-based multi-brand gambling company GVC Holdings has “only just barely begun to deliver these products.”
MGM and GVC formed a joint venture in the summer of 2018 to create together a “leading sports betting and interactive gaming platform” in the United States. The strategic partnership has seen the two companies launch online gambling experience, including wagering and gaming products, in multiple states where that is permitted.
Source: Casinonewsdailycom
