Bleichmar Fonti & Auld LLP is investigating whether Barry Diller's $48.30-per-share offer to acquire MGM Resorts International breaches fiduciary duties under Delaware law. Diller serves on MGM's board and controls People Inc., the company's largest stockholder, creating potential conflicts of interest.
BFA Law is investigating Barry Diller's $48.30-per-share bid for MGM Resorts over potential fiduciary duty breaches.
"Diller 'stands on both sides' of the proposed deal, and other MGM fiduciaries could potentially receive benefits that other stockholders do not receive, creating conflicts of interest under Delaware law," the firm said.
Diller's People Inc., formerly IAC, made the unsolicited offer June 1. People is MGM's largest single stockholder and recently entered a governance agreement giving it the right to designate two MGM directors. The MGM board said it would "carefully review and consider the proposal."
If MGM and Diller reach an agreement, Delaware law requires strict "cleansing" procedures to ensure fairness to stockholders. BFA has recovered more than $900 million from Tesla Inc.'s board and $420 million from Teva Pharmaceutical Industries Ltd. in prior litigation.
Jefferies analyst David Katz said the bid could put a floor under MGM's stock price, noting that additional merger activity in the casino sector is likely. The offer comes as Las Vegas gambling win rose 10 percent in April and May despite flat visitation, according to Jefferies. Baccarat revenue, a key driver for MGM, surged 15.2 percent in April and 58.5 percent in May.
The investigation raises the risk that Diller's offer could face legal challenges or be revised higher. MGM shareholders should watch for any special committee formation and the board's formal response to the proposal.
This article is for informational purposes only and does not constitute investment advice.
