Vici board: prospects better as independent company
Vici Properties Inc., the real estate investment trust established by Caesars Entertainment as part of the company’s reorganization as it emerged from bankruptcy protection, confirmed that it has rejected an unsolicited, non-binding written acquisition bid from MGM Growth Properties LLC, the REIT controlled by rival MGM Resorts International.
The January 5 proposal from MGM Growth Properties (MGP) proposed that MGP acquire all of the 300.3 million outstanding shares of common stock of VICI for $19.50 per share, in the form of MGP shares, a total deal worth an estimated $5.85 billion.
“VICI Properties, in consultation with its financial and legal advisors, carefully and thoroughly reviewed MGP’s unsolicited and non-binding proposal, following which Vici Properties’ board of directors unanimously determined that pursuing it was not in the best interests of the Company and its stockholders,” wrote VICI in a statement.
Edward Pitoniak, CEO of Vici Properties, said, “VICI’s board unanimously believes that our prospects as a stand-alone, independent company will deliver significantly superior results for our shareholders. With our high-quality, diversified real estate portfolio and best-in-class corporate governance, we are best positioned to successfully execute on our identifiable embedded growth from call-option and right of first refusal assets and our active pipeline of incremental accretive acquisitions. Through this we believe we will create greater long-term value than by pursuing MGP’s proposal.”
MGM had said in a statement that the proposed merger “would create one of the largest triple-net lease REITs, with an unmatched portfolio of high-quality leisure, entertainment and hospitality assets.”
MGM Resorts owns 70 percent of MGM Growth Properties, which controls the land and buildings associated with 12 of the company’s casinos and an entertainment district.
The two REITs own the land associated with some of the top casino resorts in the U.S., including the Las Vegas Strip and in Atlantic City. MGM Resorts and Caesars Entertainment continue to operate the properties through a lease agreement, paying rent to the REITs.
MGM Resorts Chairman Jim Murren, who is also chairman of MGM Growth Properties, wrote in the letter to the leadership of Vici that the “combination would also create a larger and better capitalized company with greater scale and an enhanced financial profile to support additional opportunities to create value for our respective shareholders.”
An unnamed source familiar with the negotiations told the Las Vegas Review-Journal that Vici officials were unimpressed with the $19.50 per-share offer, which was less than the share price on January 5, the day of the proposal, which was $20.20. The source also said Vici board members felt the REIT’s shareholders “would be subject to an inferior governance structure and growth prospects,” the newspaper reported.
MGM officials first met with Vici officers in December. On January 5, Murren and James Stewart, CEO of MGP, sent the letter to James Abrahamson, chairman of Vici’s board, reiterating the companies’ interest in the acquisition, asking for a response by January 8.
Vici—the name is a reference to the famous Julius Caesar quote “Veni, vidi, vici,” meaning “I came, I saw, I conquered”—was created to improve the balance sheet of Caesars Entertainment after the company’s main operating unit, Caesars Entertainment Operating Company, emerged from Chapter 11 bankruptcy protection last year.
Many analysts believe, however, that MGP is a strong suitor for VICI, and that talks between the two companies will continue. Others have speculated that it may lead to possible merger talks between the two industry giants.
