MGM Under Investigation After $48.30 Bid Revealed; DeepValue Report Flags Fixed-Claim Risks

What happened

Bleichmar Fonti & Auld LLP announced an investigation into Barry Diller's bid to acquire MGM Resorts at $48.30 per share, a price that aligns with the upper end of our bull case valuation. The DeepValue report rates MGM a WAIT, citing that the equity sits behind $1.8B in annual triple-net rent and a weak Las Vegas Strip (RevPAR fell to $228 in 4Q25). While BetMGM's cash distributions and Macau strength provide offsets, consolidated digital losses and Osaka funding commitments keep the risk/reward unattractive at current levels. The investigation adds uncertainty around the bid's fairness and may pressure the stock short-term. Our base case implies $40 value, so the offer seems full but not excessive given the fixed-claim overhang.

Implication

The investigation introduces legal risk and potential for a higher bid or termination. DeepValue's analysis suggests MGM's fundamental challenges (weak Strip, high leverage) justify the WAIT rating. If the bid fails, the stock could revert to $28-$40 range. Investors should not buy above $40 and consider trimming on any bid-driven spike above $45.

Thesis delta

The news of a $48.30 bid and investigation shifts the focus from operational recovery to M&A uncertainty. Our thesis now includes a bid premium that could temporarily lift the stock, but the underlying fixed-claim risks remain unchanged. If the deal proceeds at $48.30, it would be near our bull case; if it collapses, downside to $28 is possible. We maintain WAIT with a bias toward trimming into strength.