Anxious members of the Nevada Gaming Commission Thursday pressed for some answers over billionaire Barry Diller’s proposal to acquire MGM Resorts International, citing angst over what it might mean for the state’s largest private-sector employer.
Like he did before the Nevada Gaming Control Board, Chandler Pohl, vice president and legal counsel for MGM, said he couldn’t say much to regulators, other than what’s publicly available.
Diller’s People Inc., previously known as IAC, is making an $18 billion offer for MGM. People Inc. currently owns 26.1% of the outstanding common stock of MGM, where Diller serves as a Board member. People Inc., which trades on NASDAQ, wants to acquire all outstanding shares that it doesn’t already own for $48.30 per share in cash.
A statement put out by MGM on June 1 after the offer was made public said the Board of Directors, in consultation with its financial and legal advisors, is carefully reviewing and considering the proposal.
Concerns were first raised by Commission member Brian Krolicki, who noted that two of Nevada’s largest employers, including Caesars Entertainment, may change hands.
“It’s a fascinating and intimidating time,” Krolicki said. “It certainly has everyone’s attention. I understand why you can’t answer certain things, but you can answer some things. In the public domain, there have been multiple articles about the dynamics related to the bid and Mr. Diller’s position on the Board. To me, this is more about process. I’m very curious about the Board dynamics. Is Mr. Diller fully participating in the decisions of the Board of MGM Resorts International currently?”
Pohl said he’s personally not involved in Board discussions and couldn’t answer that.
Krolicki then asked if outside counsel was retained to help in dealing with the Board dynamics.
“All I can say is there have been public statements made by the company and there have been articles written that have not included public statements by the company,” Pohl said. “There has been some speculation in the news, but it might be attributing language to the company that the company has not made.”
Pohl said the company has taken its fiduciary responsibility seriously.
“There has been a public record that a special committee has been formed, a subset of Board members. You can’t confirm or deny that?”
Pohl said that was based on a Wall Street Journal article and that the company is doing everything it needs to do to remain compliant with its obligations under law.
Krolicki asked about a potential impact the deal has on MGM’s $10 billion casino development underway in Okaka, Japan, and its current operations in Macau.
Pohl responded that Diller’s didn’t carve out any aspect of the company.
“I have nothing but respect for the folks in the C-suite and I have a firm belief that the fiduciary aspect of those making the decisions will be of the highest purpose and noble intentions. We’re watching, whether it’s jobs, revenue, image, or shareholders.”
Commissioner George Markantonis said the major point to him is MGM’s employees who must be concerned. He said it’s important to keep them informed, given the importance of morale and retention.
Pohl said there’s a companywide internal meeting for senior leaders and directors. Those are morale-building meetings and he said it may be a topic discussed.
Markantonis said employees may be watching the Commission proceedings they’re counting on regulators to protect their jobs.
Commissioner Abbi Silver said she visited Japan earlier this year and called it “amazing what’s going on there.” She said it’s already challenging with the new regulators in Japan, since gaming is new to the country. “How is the Diller deal going to affect the opening or does it affect the opening or anything with Osaka?”
Pohl said the company is moving ahead with Osaka.
The Diller proposal represents a premium of 24.1% to the volume-weighted average price of MGM common stock for the 30 trading days ending on May 29, a more than 30% premium to the stock’s volume-weighted average price for the 90 trading days ending on the same date, and a 10.6% premium to the most recent closing price, the company announced.
