MGM May Be Mulling Marriage with M Resort

Posted on: December 30, 2022, 04:12h. 

Last updated on: December 30, 2022, 05:16h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

The new year hasn’t officially arrived. But the 2023 Las Vegas rumor mill is already spinning, as speculation swirls that MGM Resorts International (NYSE:MGM) may be interested in acquiring the M Resort Spa Casino in Henderson, Nevada.

M Resort
The M Resort Spa Casino in Henderson, Nevada. MGM may be interested in buying it. (Image: YouTube)

Scott Roeben, also known as Vital Vegas, reports that a “reliable source” said that MGM is in early-stage talks with Penn Entertainment (NASDAQ:PENN) regarding a potential sale of the venue, and that the discussions were constructive.

Casino sales can take awhile, due diligence and all that, so we may not hear any official word about the sale of M Resort for some time to come. There’s also a chance the parties involved fail to come to an agreement, and we’ll never hear anything further about it,” wrote Roeben.

An estimated price for M Resort wasn’t mentioned. But with the casino-hotel being an off-Strip venue, it’s unlikely to command the $1 billion-plus price tags that are so common with Strip integrated resorts.

M Resort Sale Possible

For now, the idea of MGM acquiring M Resort is merely speculation. It’s worth noting that in the gaming industry, there are more rumored than closed deals.

Specific to the M Resort, Penn selling the operating rights to the venue would be interesting for multiple reasons. First, the company said in October it’s committing $206 million to double the size of the property. Second, if Penn does sell M Resort, it would effectively eliminate the operator’s Las Vegas footprint following the recently completed sale of the Tropicana’s operating rights to Bally’s (NYSE:BALY).

If Penn parts with M’s operating rights, its lone Nevada venue would be Cactus Pete’s Resort Casino in Jackpot. Any transaction involving M Resort would be for the operating rights, because the real estate assets are owned by Gaming and Leisure Properties (NASDAQ:GLPI).

Additionally, MGM has long favored an asset-lite model. The largest operator on the Las Vegas Strip leases all of its US venues.

M Buy Would Further Cement MGM’s Vegas Dominance

It’s not clear if Penn is holding talks with other suitors regarding M Resort. If the Pennsylvania-based company opens the bidding process in an effort to draw the highest possible price, it’s likely there would be multiple suitors.

Those could include operators, such as MGM, that are looking to bolster Las Vegas footprints, as well as those that currently have limited or no exposure to Nevada. As for MGM, adding M Resort to its portfolio would be a sensible addition and one that solidifies its dominant Las Vegas perch. The company has recently been active, acquiring the Cosmopolitan and selling the Mirage. Such transactions aren’t always seamless.

“There are pros and cons whenever a new company takes over a casino’s operations. The buzz out of Cosmopolitan isn’t especially flattering to MGM Resorts, and Cosmo has taken a significant hit on review sites. There has also reportedly been an exodus of key executives, not uncommon in such ownership changes,” added Roeben.