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MGM Resorts Continues Buying Back Shares

Along with one of its major stockholders, MGM Resorts International is taking back more control of the company. MGM announced this week that it and IAC/InterActiveCorp (IAC), a US media and technology firm, will acquire 4.5 million shares of MGM Resorts common stock from another shareholder, Corvex Management LP.

MGM Resorts Takes Back Control

MGM and IAC will pay $202.5 million each for the shares. IAC’s stake in the gaming company is now around 14.4%. IAC acquired a 12% interest in MGM Resorts in August 2020 via a series of transactions. 

Corvex will continue to own approximately 6.67 million shares, or 1.5%, of MGM common stock, following the transaction.

Jonathan Halkyard, MGM Resorts’ chief financial officer and treasurer, said that the purchase is a “testament to the faith” the company has in its long-term trajectory and reflects MGM’s commitment towards its capital allocation strategy. This, he explained, includes returning funds to shareholders as well as maintaining a strong financial sheet.

MGM confirmed that the acquisition was being done under its February 2020 $3-billion stock purchase program. There will be $636.7 million still to be purchased after the transaction.

The company had approximately 444.8 million shares of its common stock outstanding as of February 12. Last year, MGM said it returned $1.75 billion to stockholders via share repurchases and strategic investments.

MGM Enjoys Significant Growth

The news comes as MGM reports its financial health. In the fourth quarter of last year, it had consolidated net revenue of $3.1 billion, a 105% increase over the same period a year earlier. Net income attributable specifically to its MGM Resorts operations was $131 million after having seen a loss of $448 million in the same period in 2020.

MGM’s Las Vegas Strip properties, as well as in regional markets across the nation, were the driving force behind the fourth quarter’s record cash flow and margins. Some numbers even surpass those of pre-pandemic years.

MGM’s Strip properties reported $1.8 billion in revenue for Q4. This is a record 27% increase over 2020 and a record 26% above the pre-pandemic fourth quarter of 2019. Partly this is due to the operator’s acquisition of the Aria and Vdara properties and the relaxation of pandemic restrictions.

Regional operations saw net revenues rise 51% to $900 million compared with the previous year and remain flat compared with the fourth quarter of 2019. The adjusted Property EBITDAR was $309 million. This is a 95% increase over 2020 and a 36% increase over the fourth quarter of 2019.

For its full-year results, the company reported consolidated net revenues of $9.7 billion, 88% more than the previous year. Net income attributable to the business was $1.3 billion, compared with a $1-billion net loss in 2020. MGM also reported a consolidated Adjusted EBITDAR of $2.4 billion in that period.

These include leading the US sports betting market and iGaming market through BetMGM and pursuing geographical expansion such as an integrated resort in Japan. Reinvesting in its core businesses will help drive sustainable growth, according to the company.