MGM Resorts and IAC buy back 9M shares worth $405M of MGM common stock from Corvex

Entertainment giant MGM Resorts International and New York-based holding company IAC have agreed to purchase 9 million shares of MGM Resorts common stock from hedge fund Corvex Management LP, both parties announced on Monday.

MGM and IAC will each purchase 4.5 million shares of common stock at $45 per share, for a total aggregate amount of $405 million, or $202.5 million each company, according to a press statement on the agreement.

"Today's announcement is a testament to the confidence we have in the long-term trajectory of our business and reflects the commitment we have to our capital allocation strategy, which includes returning cash to shareholders and maintaining a strong balance sheet," said Jonathan Halkyard, Chief Financial Officer and Treasurer of MGM Resorts International. 

Jonathan Halkyard, CFO and Treasurer of MGM Resorts International

According to the executive, with this purchase, the gaming giant has now bought back approximately 11.5% of its outstanding shares. Halkyard claims this is proof of the company’s “continued confidence” in MGM stock. This move pushes IAC’s stake in the US gaming giant to around 14.4%.

Following the announced transactions, funds associated with Corvex will continue to own approximately 6.67 million shares, equivalent to about 1.5% of the company’s outstanding common stock. The purchases are expected to settle by February 16, 2022. 

"Keith Meister (Managing Partner and Chief Investment Officer, Corvex Management LP) shares our strategic vision for MGM Resorts to be the world's premier gaming entertainment company, and we look forward to having him continue to serve as a valuable member of our Board," said Paul J. Salem, Chairman of the Board, MGM Resorts.

"IAC is grateful to be an MGM Resorts shareholder, and happy for this opportunity to increase our ownership," stated Joey Levin, CEO of IAC. Following the transaction, IAC will own approximately 63.5 million shares, or about 14.4% of the company's outstanding common stock.

For MGM Resorts, the purchase will be made pursuant to the terms of the company’s Feb. 2020 $3 billion stock repurchase program, of which $636.7 million will remain following the transaction. As of Feb. 12, 2022, there were approximately 444.8 million shares of the company’s common stock outstanding, MGM explains.

"I'm pleased by the transformative transactions the company has undertaken since I joined the Board in 2019," said Keith Meister of Corvex Management LP. "I look forward to continuing to serve as a Board member."

On February 9, MGM Resorts shared its financial report for the fourth quarter and full-year 2021. The company posted consolidated net revenues of $9.7 billion for FY21, an increase of 88% over the prior year, and net income attributable to the business of $1.3 billion, compared to a $1 billion net loss in 2020.

The full-year achievements come on the back of a record fourth quarter, in which the company posted consolidated net revenues of $3.1 billion, an increase of 105% compared to the prior-year quarter, which was negatively affected by temporary closures and restrictions no longer in place. Net income was at $131 million, up from a net loss of $448 million.