IAC Buys Shares in MGM Resorts International; Looks to iGaming Sector
IAC is an American holding company that recently made a big splash in the gambling industry. The company announced at the beginning of the week that they have spent around $1 billion to buy shares of MGM Resorts International over the past few months. With the high price tag, the company was able to acquire a 12% interest in MGM.
This is a big investment for IAC as they look to move into a new venture within the gambling industry. The company was created back in the late 1990s with a focus on internet media and services. Now, they are looking to get into the lucrative world of online gambling.
IAC seems to have intentions to get into the iGaming sector. Barry Diller is the chairman of IAC who stated that the company has been on the hunt for a way to enter the online gambling industry in the US for quite some time. They had yet to find a suitable partner until deciding to go with MGM.
Now, IAC has a minority share of the MGM company. They will not have control over what MGM does with its online gambling services but according to CEO Joey Levin, IAC is considered a long-term strategic partner and they are welcoming to any opportunity to contribute to the success of MGM in that manner.
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Paul Salem, the chairman of the MGM Board, stated that they are excited to welcome IAC as an investor along with Mr. Diller. They invite the company to join the Board of Directors.
Explanation to Shareholders
With the recent acquisition, IAC provided a letter to shareholders explaining their decision. In the letter, IAC explained that online gambling is a small portion of the overall business that MGM provides. They find the online sector appealing because it offers huge potential for future growth.
The stock of MGM is trading at a low price right now due to Covid-19. For IAC, they feel that the company is in a better position and will be able to rebound in a strong manner. IAC believes that MGM has enough access to capital and cash that they can come back from the pandemic stronger than ever when compared to competitors.
IAC looks at the land-based venues of MGM and sees them as a way to expand further online. And this could be true. In many states, online gambling operations is connected to a land-based venue. Operators need a land-based partner to be able to launch online services. For MGM, they have locations in states where they could offer services in the future.
MGM could be the first to offer online casino gaming in the state of Michigan due to its MGM Grand Detroit. This is just one way that IAC sees growth potential for the company.
For now, IAC is looking forward to working with MGM Resorts International. It will be interesting to see if any IAC members will be joining the MGM board or what other contributions the company will make towards the gambling brand.
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