What Happened?
Shares of hospitality and casino entertainment company MGM Resorts (NYSE: MGM) jumped 16.4% in the afternoon session after People Incorporated submitted a non-binding proposal to acquire all outstanding shares of the company it does not already own for $48.30 per share in cash.
People Inc., formerly known as IAC, already owns 26.1% of MGM and is seeking to purchase the remaining 73.9% to take the casino operator private. The offer, which values the company at over $18 billion, represents a premium of 10.6% to MGM's most recent closing price and a 24.1% premium to the 30-day volume-weighted average price. The significant premium over recent trading levels drove the stock's sharp increase. Following the news, Susquehanna raised its price target on MGM stock from $45.00 to $50.00 and maintained a positive rating.
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What Is The Market Telling Us
MGM Resorts’s shares are somewhat volatile and have had 12 moves greater than 5% over the last year. But moves this big are rare even for MGM Resorts and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 5 days ago when the stock gained 8.8% on the news that JPMorgan upgraded its rating on the company's stock to Overweight from Neutral.
The firm also increased its price target for MGM Resorts to $46 from $41. An Overweight rating typically suggests that an analyst believes the company's stock will perform better than the average return of the stocks the analyst covers. The upgrade indicates a more positive outlook on the company's future performance from the investment bank.
MGM Resorts is up 38.7% since the beginning of the year, and at $50.61 per share, it has set a new 52-week high. Investors who bought $1,000 worth of MGM Resorts’s shares 5 years ago would now be looking at an investment worth $1,166.
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