Sometimes you have to grab the bull by the horns. MGM Resorts apparently sees a strong future for the company, as it has announced a plan to repurchase around $2 billion of its own stock. No timeline was given for the buy-back, but it comes on the heels of a $1-billion repurchase that was announced last September.
In announcing the repurchase, MGM Resorts CEO Jim Murren said, “The latest share repurchase authorization reflects the company’s financial strength and continued commitment to returning capital to our shareholders. We are pleased with the company’s strong balance sheet, which has allowed us to … to invest in our properties and explore prudent growth opportunities.”
The latest repurchase only represents around 10% of the company’s total market value. Repurchases such as these are usually conducted when company executives feel a stock price is undervalued, and anticipate strong growth in the future.
In light of the repurchase, the rumors of MGM courting a takeover of Wynn Resorts should drift off into nothingness. While the rumors had never been concerned, there was a lot of whispering of the potential deal. A New York Post report claimed Wynn CEO Matt Maddox would like to dissolve the company if the right offer presented itself. However, that offer probably won’t come from MGM.
Even with $3 billion in its pockets, the ability to purchase Wynn would be out of reach. Murren spoke last February on the subject, stating, “[IT] would be difficult to believe anyone is going to have the financial wherewithal to make a serious bid [for Wynn]. It’s a very large organization.”
Speaking of Wynn, its stock price is the highest it has been since 2014. Last Thursday, it closed at $201.51, 23% higher than where it stood after Steve Wynn’s sexual shenanigans were announced in February.
Shares in MGM Resorts have been a little under the weather. They remained virtually flat from February to May, closing at $33.37 last Thursday. MGM has been focusing on its domestic operations, looking to grab a larger share of the market. It has taken complete control of the Borgata in Atlantic City, is currently building an integrated resort worth around $1.4 billion outside of Washington, DC and will soon open a $960-million casino, the MGM Springfield, in Massachusetts.