MGM Growth Properties, controlled by VICI Properties Inc, agreed on Wednesday to sell its assets to MGM Resorts in a $17.2 billion deal that will see the casino operator cash back on its valuable real estate to fund growth.
Shares of VICI increased about 10% during premarket trading, MGM Resorts rose about 5% while SOM Growth dipped about 1%.
The stock-for-stock deal, which includes $5.7 billion of debt, will get MGM Resorts $4.4 billion for its stake in MGM Growth and is part of MGM's 'asset light' strategy to invest in areas such as sports betting and casino development in Japan.
Last month, MGM Resorts said it would buy the remaining 40% stake in its joint venture city center complex, so that it could sell two properties within the complex to private equity firm Blackstone for $3.89 billion.
remains focused on pursuing growth opportunities in our core business, with significant financial flexibility to continue to deploy capital to maximize shareholder value, MGM Resorts Chief Executive Officer Bill Hornbuckle said.
MGM Growth owns a portfolio of properties which consists of 12 resorts in Las Vegas and elsewhere in the United States.
The MGM Growth stock offer of $43 per share represents a premium of about 16% to VICI's closing price on Tuesday.
The portfolio of VICI consists of 28 gaming facilities and about 17,800 hotel rooms and more than 200 restaurants, bars, nightclubs and sportsbooks.
MGM Resorts will own about 1% stake in VICI operating partnership worth about $370 million.
The deal is expected to close in the first half of 2022, said the companies.