Key Takeaways:
- BFA Law is investigating Barry Diller's $48.30-per-share bid for MGM Resorts
- Diller sits on MGM's board and controls its largest shareholder, creating conflicts
- The probe examines whether the deal meets Delaware's fairness standards
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BFA Law probes Diller's $48.30 bid for MGM Resorts over conflicts
Bleichmar Fonti & Auld LLP is investigating Barry Diller's $48.30-per-share bid to acquire MGM Resorts International, citing potential conflicts of interest.
"As a director, Diller owes fiduciary duties to MGM and its stockholders," the law firm said in a statement Monday.
Diller, a member of MGM's board, controls People Inc., formerly IAC, which is MGM's largest single stockholder. People made an unsolicited bid June 1 to buy the remaining MGM stock for $48.30 per share. People recently entered a governance agreement with MGM giving it the right to designate two board members, deepening the conflict, BFA said.
The investigation focuses on whether the deal complies with Delaware's strict requirements for cleansing conflicts of interest. MGM said its board will carefully review the proposal to determine the course of action in the best interests of all shareholders.
BFA is probing whether other MGM fiduciaries could receive benefits unavailable to other stockholders, creating conflicts under Delaware law. The firm is seeking to determine whether any potential agreement meets the state's standards for fairness.
The law firm has recovered more than $900 million in value from Tesla Inc.'s board and $420 million from Teva Pharmaceutical Industries Ltd., according to its website.
The probe raises the risk that Diller may need to raise his bid or face legal challenges that could delay the transaction. MGM shareholders should watch for any special committee formation or enhanced disclosure from the board in coming weeks.
This article is for informational purposes only and does not constitute investment advice.
