MGM CFO Halkyard Forecasts Further M&A, Share Buybacks

MGM Resorts International (NYSE:MGM) could participate in more mergers and acquisitions activity and continue buying back its slumping stock its chief financial officer said at an industry conference. Speaking by phone at the Jefferies Global Consumer Conference earlier today, MGM CFO Jonathan Halkyard said the casino operator is looking to keep some capital on hand […]

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MGM Resorts Worldwide (NYSE:MGM) might take part in additional mergers and acquisitions exercise and proceed shopping for again its slumping inventory its chief monetary officer mentioned at an business convention.

MGM CFO Jonathan Halkyard (proper) in a 2019 interview. He sees the corporate persevering with to repurchase its personal shares. (Picture: Resort Information Now)
Talking by cellphone on the Jefferies World Client Convention earlier at present, MGM CFO Jonathan Halkyard mentioned the on line casino operator is seeking to preserve some capital readily available for attainable takeover alternatives and that extra cash stream may very well be returned to traders.
So, we expect the shares are precious proper now, and we’ll preserve some dry powder for some further M&A, issues like LeoVegas, which we simply introduced, which can full this fall,” mentioned Halkyard on the decision.
In Could, the Bellagio operator unveiled a $607 million provide for LeoVegas AB to spice up its web on line casino and sports activities wagering footprint in Europe. Earlier this month, it was reported that Sweden’s Financial Crime Authority (SEC) is investigating allegations of insider buying and selling on the firm,  however that doesn’t look like standing in the best way of MGM’s takeover of the corporate.
MGM Buyback Binge Might Proceed
MGM has been a devoted purchaser of its personal shares. As the corporate famous on its first-quarter earnings convention name, it purchased again $3 billion of its inventory within the earlier months.

The Mandalay Bay operator is such a voracious purchaser of its fairness that it’s now a member of the NASDAQ US BuyBack Achievers Index, which requires member companies to cut back shares excellent counts by at the very least 5% over the trailing 12 months. MGM is the one gaming firm in that gauge.

With an estimated $2.4 billion remaining on its present buyback effort and the inventory down 37.72% year-to-date, MGM might proceed shopping for again its inventory as a means of signaling to traders administration sees worth within the inventory.
“The best way I all the time have a look at it’s the capital, the free money stream that we generate belongs to the shareholders failing any higher use of that capital, we return it to shareholders,” provides Halkyard.
What seems to be additional off is earnest resumption of the quarterly dividend, which at the moment resides at only a quarter of a cent following a 2020 minimize because of the coronavirus pandemic.
“Our board will decide in some unspecified time in the future whether or not it is smart to reinstitute a dividend as soon as we sort of get totally into — extra totally into the restoration from the pandemic, however I feel that share repurchases will proceed to be a significant a part of our capital allocation technique,” notes Halkyard.
Japan Feedback
Whereas noting MGM is enthusiastic in regards to the prospects in Osaka, Japan — a undertaking the corporate has been engaged on for a number of years — Halkyard provides it may very well be September when Japan formally awards gaming licenses.
The MGM monetary boss factors out the enterprise in Japan is very large and goes to take a number of years to finish.
“We’re going to attend till, you realize, issues are somewhat bit extra superior till we get into specifics about the associated fee and this system that we’re excited about, however we expect it’s a large market alternative for the corporate that we’ve acquired nice companions, our model is thought within the area and this system that we’re growing goes to be only a phenomenal built-in resort with sturdy returns,” mentioned Halkyard on the Jefferies convention.
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