MGM Resorts Dissident Land & Buildings Drops Bid for BoardChristopher Palmeri
Land & Buildings Investment Management LLC dropped its activist effort to gain board seats at MGM Resorts International, after failing to gain the support of some of the casino company’s biggest shareholders.
The Stamford, Connecticut-based money manager had been pressing MGM, the largest casino operator on the Las Vegas Strip, to create a real estate investment trust with its properties to boost its stock price. The firm, led by Jonathan Litt, had nominated four directors for election at the company’s May 28 annual meeting.
Land & Buildings couldn’t sway three of MGM’s largest investors, Kirk Kerkorian’s Tracinda Corp., Infinity World and John Paulson -- which all expressed support for the existing board. Projections by Land & Buildings that MGM could reach $55 a share were based on over-optimistic assumptions, according to Chris Jones, an analyst at Union Gaming Group in New York.
“The Land & Buildings proposal raised awareness,” said Jones, who has a “buy” recommendation on the stock. “It’s pretty clear MGM is doing the right thing at this point.”
Land & Buildings, in a statement on Tuesday, cited MGM’s hiring of financial advisers and “encouraging public statements” from Tracinda, MGM’s largest shareholder, as reasons for dropping its bid.
“Since our initial engagement with MGM in January 2015, the company and its insider shareholders have finally taken a series of steps that, in our view, can help address the company’s persistent undervaluation and underperformance,” Land & Buildings said.
“We appreciate the support and feedback we have received from our shareholders,” MGM Chairman and Chief Executive Officer Jim Murren said in a statement. “Our board and management have always been receptive to constructive shareholder views and are committed to continuing to thoroughly evaluate all strategic initiatives that will deliver sustainable value.”
Support from proxy advisory firms was mixed. Institutional Shareholders Services Inc. recommended MGM’s slate. Glass Lewis & Co. backed one of Land & Buildings’ four nominees, while Proxy Mosaic supported all but one of the dissident director candidates.
MGM was little changed at $19.71 Tuesday in New York. The shares are up 1.5 percent since Land & Buildings made its proposal public on March 17.
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