MGM joins forces with IAC.
MGM Resorts, a well-known US casino operator, recently sold 12% of its shares worth $1 billion to IAC (InterActiveCorporation), a digital media giant. The goal of this partnership is to enhance MGM's online presence. The gaming company is going through a period of change and restructuring. What could be the possible developments?
Increasing MGM's digital footprint
Following the news in January that MGM was selling segments of its casinos to Blackstone, another major transformation is underway. MGM is now selling a 12% stake to IAC for a billion dollars. IAC is primarily known for its online dating platforms like Tinder and Match.com. They also own Expedia, an online travel agency, and ANGI Homeservices.
IAC sees this investment in the Las Vegas-based gaming firm MGM as a unique chance to branch out its business. Barry Diller, Chairman of IAC, said that the company is currently thriving. They have $3.9 billion in cash, no debt, and a significant amount of energy.
Diller finds the MGM investment particularly appealing due to its dominant position in the leisure, hospitality, and gaming sectors. However, online gaming only makes up a minor share of MGM's overall business. This partnership with MGM is therefore the logical move for IAC to incorporate the division into their portfolio and gain more reach.
Diller is an experienced media manager who has previously served as CEO of Paramount Pictures and has produced films like Indiana Jones, Beverly Hills Cop, and Grease. He later became the Chairman and CEO of 20th Century Fox, and this is where he established the Fox broadcast network and supported cult TV series like The Simpsons.
Unique investment for IAC
In a letter to shareholders, Diller and senior CEO Joey Levin discussed their uncommon investment in MGM. First, they acquired a large minority position in a public company, an infrequent strategy at IAC. Second, they purchased common stock, which is available to any investor. Third, they purchased stock from a company barely associated with the Internet. Fourth, this new direction for IAC may lead some of their assets towards new horizons.
Diller expressed his enthusiasm to contribute to MGM's success by helping them launch online in a manner that both boards would approve of. He believes the possibility to drive forward unique expansions and participate in tremendous potential is rare. IAC has been looking for opportunities to enter the burgeoning online gaming market for quite some time, as they are playing catch-up in this area. MGM's strong physical presence provides a perfect foundation for a joint online business.
Impact of COVID-19 pandemic
Covid-19's adverse effect on the casino industry, with the shutdown of casinos in Las Vegas, has also impacted MGM significantly. For this reason, the development of online gaming is also crucial to the partnership. MGM has an iconic brand with various potential monetization opportunities.
The joint venture between MGM and GVC, signed in June 2019, is also significant in this context. With a reputable partner like GVC (the British owner of Ladbrokes), the ideal conditions are in place to establish a joint online business. The aim of this partnership was to create a new Roar Digital brand and establish a sports betting program after PASPA repeal in May 2018. Each state in the US is now responsible for regulating sports betting.
MGM welcomes the partnership
The pandemic-stricken MGM welcomed IAC's investment with open arms. Paul Salem, Chairman of MGM Resorts, expressed his appreciation for the new investor and invited them to participate in the upcoming board nominations. Salem praised the vast digital experience of Diller and Levin. He believed that the partnership could enhance MGM's brand family and leverage IAC's digital expertise. However, the ultimate success is not guaranteed.
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Source: www.onlinecasinosdeutschland.com
