An $18 billion acquisition proposal, inclusive of debt, has been made for MGM Resorts International (MGM.US)

The offer of $48.30 per share comes from People Inc., the entity formerly known as IAC and controlled by media magnate Barry Diller. The casino and resort operator confirmed in a statement on Monday that it had received the unsolicited proposal and would carefully review it. The news propelled MGM's share price to close more than 16% higher on Monday. However, Stifel analyst Steven M. Wieczynski has expressed the view that the $48.30 per share offer appears low and may be rejected by MGM's board. The analyst pointed to the recent deal where billionaire hospitality mogul Tilman Fertitta announced an acquisition of Caesars Entertainment at $31 per share, suggesting a fair valuation for MGM could be in the range of $50 to $55 per share. In a report issued Monday, the analyst wrote that the MGM board is likely to reject this initial proposal and seek a higher acquisition premium. The analyst noted that, as previously indicated following the Caesars deal, MGM's fair value should be at least $50 to $55 per share based on that valuation benchmark. The analyst maintains a "buy" rating on MGM. The analyst further elaborated that Fertitta's $31 per share offer for Caesars represented a valuation multiple of approximately 7.2 times the projected 2027 EBITDAR. Diller's offer for MGM is only about 0.5 times higher than that level. This valuation is considered overly conservative, as MGM's portfolio of higher-quality luxury assets, more favorable demographic positioning—including exposure to Macau and the premium Las Vegas Strip market—along with attractive growth projects like the integrated resort in Japan, should command a higher relative valuation premium. Nonetheless, the analyst also acknowledged difficulty in identifying a credible strategic buyer capable of submitting a higher bid. Furthermore, with People Inc. controlling approximately 26% of the voting power, potential private equity investors might be deterred from making a competing offer and could instead choose to participate in the transaction through People Inc.'s proposed scheme.