Nasdaq-listed IAC acquires $1bn stake in MGM

Digital media giant InterActiveCorporation has acquired $1bn stake in MGM.

The digital media giant InterActiveCorporation (IAC) has acquired a 12% stake in MGM Resorts International, describing the investment as a “once in a decade” opportunity.

According to the announcement, the Nasdaq-listed IAC has acquired a $1bn stake, which is the equivalent to approximately 12% of MGM’s shares.

Following the announcement, MGM Resorts shares jumped 13% on Monday.

Who is IAC?

IAC, which is led by media executive Barry Diller, describes itself as “builder of online companies.”

The business has previously acquired, grown and spun off a variety of businesses such as Expedia, Match.com, Daily Beast, Investopedia, and Vimeo.

IAC said it would provide MGM with its experience in e-commerce as it builds out its online gambling platform.

IAC sees online potential

In a letter to investors, IAC said the decision to acquire a stake of the operator’s businesses was based on the potential of its online gambling operation.

Barry Diller, IAC chairman and senior executive, said: “With the separation of Match Group from IAC, and ‘new’ IAC emerging with $3.9bn of cash, no debt, and its opportunistic zeal intact, we are energized and excited to make this investment in MGM.

“IAC’s foundational concept of seeking opportunities to build interactive businesses is our base rationale – there is a digital first opportunity within MGM Resorts’ already impressive offline businesses, and with our experience we hope we can strongly contribute to the growth of online gaming.”

Joey Levin, CEO of IAC said: “MGM Resorts presents a unique opportunity for IAC to own a meaningful piece of a preeminent brand in a large category with immense potential to move online. We will be a minority investor and a long-term strategic partner and would welcome the opportunity to contribute to MGM’s success in any way that MGM’s Board would look favorably on our involvement.”

IAC said it would “love to help” MGM optimize its MLife loyalty scheme and attract new a new digital audience.

MGM is on board

In MGM’s statement, the operator welcomed the investment from IAC.

The investment will also be welcome news for MGM’s joint venture partner GVC Holdings, after both companies said they would spend “whatever it takes” to make BetMGM a market leader in the US sports betting space.

MGM CEO and President Bill Hornbuckle said: “IAC’s expertise in growing and expanding brands online is a natural fit for our focus on enhancing the resort experience through curated and personalized offerings, as well as digital enhancements in sports betting and online gaming. We appreciate that they share our long-term strategic vision for growth and maximizing value for our shareholders. We welcome their collaboration and are excited at the possibilities it will bring.”

Paul Salem, MGM Resorts Chairman of the Board of Directors said: “We could not be more excited to welcome IAC and Mr. Diller as an investor in MGM Resorts.  Mr. Diller and Joey Levin, CEO of IAC, bring vast experience in both entertainment and online commerce and we will take full advantage of their experience.

“IAC’s family of brands and digital expertise are a great complement to the direction MGM Resorts has been taking both in leveraging our digital assets to enhance our guests’ experience and building a leading iGaming and sports betting business in BetMGM. We welcome IAC as a long-term strategic partner and intend to invite them to join our Board of Directors.”

Synergy between online and offline offerings

In IAC’s letter to investors, the company compared MGM to Disney, in the sense that its physical presence provided it with an advantage over purely online rivals, as there are “multiple avenues to monetize the same intellectual property”.

This could be done by using the same odds across MGM’s online and land-based sports betting offerings or via cross-selling MLife loyalty customers into the operator’s online casino product.

In the Letter, IAC said: “MGM pairs a strong physical presence and brand with talented online operators in a fast-growing joint venture [Roar Digital] in online gaming.”

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