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ACQUISITIONS AND DIVESTITURES | 9 Months Ended
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Sep. 30, 2023
Business Combination and Asset Acquisition [Abstract] |
ACQUISITIONS AND DIVESTITURES | ACQUISITIONS AND DIVESTITURES Push Gaming acquisition. On August 31, 2023, LeoVegas acquired 86% of digital gaming developer, Push Gaming Holding Limited (“Push Gaming”) for total consideration of $145 million, which was preliminarily allocated to $126 million of goodwill and $40 million of amortizable intangible assets. LeoVegas acquisition. On May 2, 2022, the Company commenced a public offer to the shareholders of LeoVegas to tender 100% of the shares at a price of SEK 61 in cash per share. On September 7, 2022, the Company completed its tender offer and acquired 65% of the outstanding shares of LeoVegas and, at the completion of an extended acceptance period on September 22, 2022, acquired an additional 2% of outstanding shares, for an aggregate cash tender price of $370 million. During the tender offer period, the Company had acquired 31% of outstanding shares in open market purchases that had an acquisition-date fair value of approximately $172 million. As the Company’s previous 31% ownership interest was accounted for at fair value, no gain or loss was recorded upon consolidation. The remaining outstanding shares, with a fair value of approximately $11 million based upon the tender price, were settled by the Company in cash in connection with squeeze-out proceedings during the second quarter of 2023. The acquisition provided the Company an opportunity to create a scaled global online gaming business. The Company recognized 100% of the assets, liabilities, and noncontrolling interests of LeoVegas at fair value at the date of the acquisition. The fair value of the acquired equity interests of LeoVegas was determined by the tender price and equaled $556 million, inclusive of cash settlement of equity awards. Under the acquisition method, the fair value was allocated to the assets acquired, liabilities assumed, and noncontrolling interests. T he Company estimated fair value using level 1 inputs, level 2 inputs, and level 3 inputs. The estimated fair values of the identified intangible assets were determined using methodologies under the income approach based on significant inputs that were not observable. The intangible assets include trademarks, which is an indefinite-lived intangible asset, and customer lists and technology, which are finite-lived intangibles that are amortized over each of their estimated useful lives of five years. Goodwill is primarily attributable to the profitability of LeoVegas in excess of identifiable assets and is not deductible for tax purposes. All of the goodwill was assigned to Corporate and other. The following table sets forth the purchase price allocation (in thousands):
Cash and cash equivalents | $ | 93,407 |
Receivables and other current assets | 36,872 |
Technology | 109,027 |
Trademarks | 144,374 |
Customer lists | 126,526 |
Goodwill | 288,367 |
Other long-term assets | 19,181 |
Accounts payable, accrued liabilities, and other current liabilities | (118,302) |
Debt | (104,439) |
Other long-term liabilities | (36,457) |
Noncontrolling interests | (2,861) |
| $ | 555,695 |
The operating results for LeoVegas are included in the consolidated statements of operations from the date of acquisition. LeoVegas’s net revenue for the period from September 7, 2022 through September 30, 2022 was $31 million and operating loss and net loss were $3 million and $4 million, respectively. The Cosmopolitan acquisition. On May 17, 2022, the Company acquired 100% of the equity interests in the entities that own the operations of The Cosmopolitan for cash consideration of $1.625 billion plus working capital adjustments for a total purchase price of approximately $1.7 billion. The acquisition expands the Company’s customer base and provides a greater depth of choices and experiences for guests in Las Vegas. The Company recognized 100% of the acquired assets and assumed liabilities at fair value at the date of the acquisition. Under the acquisition method, the fair value was allocated to the assets acquired and liabilities assumed in the transaction. The Company estimated fair value using level 1 inputs, level 2 inputs, and level 3 inputs. The estimated fair values of the identified intangible assets were determined using methodologies under the income approach based on significant inputs that were not observable. The intangible assets include trademarks, which is an indefinite-lived intangible asset, and customer lists, which is amortized over its estimated useful life of seven years. Goodwill, which is deductible for tax purposes, is primarily attributable to the profitability of The Cosmopolitan in excess of identifiable assets as well as expected synergies. All of the goodwill was assigned to the Las Vegas Strip Resorts segment. The following table sets forth the purchase price allocation (in thousands):
Cash and cash equivalents | $ | 80,670 |
Receivables and other current assets | 94,354 |
Property and equipment | 120,912 |
Trademarks | 130,000 |
Customer lists | 95,000 |
Goodwill | 1,289,468 |
Operating lease right-of-use-assets, net | 3,404,894 |
Other long-term assets | 23,709 |
Accounts payable, accrued liabilities, and other current liabilities | (145,136) |
Operating lease liabilities | (3,401,815) |
Other long-term liabilities | (1,570) |
| $ | 1,690,486 |
The operating results for The Cosmopolitan are included in the consolidated statements of operations from the date of acquisition. The Cosmopolitan’s net revenue for the period from May 17, 2022 through September 30, 2022 was $465 million and operating income and net income were each $57 million. Unaudited pro forma information - The Cosmopolitan acquisition. The following unaudited pro forma consolidated financial information for the Company has been prepared assuming the Company’s acquisition of The Cosmopolitan had occurred as of January 1, 2021. The unaudited pro forma financial information below is not necessarily indicative of either future results of operations or results that might have been achieved had the acquisition been consummated as of the indicated date. Pro forma results of operations for the LeoVegas and Push Gaming acquisitions have not been included because they are not material to the consolidated results of operations.
| Three Months Ended September 30, |  | Nine Months Ended September 30,
| 2022 |  | 2022
| (In thousands)
Net revenues | $ | 3,416,072 |  |  | $ | 9,958,088 |
Net income attributable to MGM Resorts International | (576,830) |  |  | 1,203,246 |
VICI Transaction. Prior to the closing of the VICI Transaction (defined below), MGM Growth Properties LLC (“MGP”) was a consolidated subsidiary of the Company. Substantially all of its assets were owned by and substantially all of its operations were conducted through MGM Growth Properties Operating Partnership LP ("MGP OP”). MGP had two classes of common shares: Class A shares and a single Class B share. The Company owned MGP’s Class B share, through which it held a controlling interest in MGP as it was entitled to an amount of votes representing a majority of the total voting power of MGP’s shares. The Company and MGP each held MGP OP units representing limited partner interests in MGP OP. Additionally, the Company had leased the real estate assets of The Mirage, Luxor, New York-New York, Park MGM, Excalibur, The Park, Gold Strike Tunica, MGM Grand Detroit, Beau Rivage, Borgata, Empire City, MGM National Harbor, MGM Northfield Park, and MGM Springfield from MGP OP. The Company also leased, and continues to lease, the real estate assets of Mandalay Bay and MGM Grand Las Vegas from subsidiaries of a venture that was 50.1% owned by a subsidiary of MGP OP at the time of the transaction (such venture, the “MGP BREIT Venture”). On April 29, 2022, VICI Properties Inc. (“VICI”) acquired MGP in a stock-for-stock transaction (such transaction, the “VICI Transaction”). MGP Class A shareholders received 1.366 shares of newly issued VICI stock in exchange for each MGP Class A share outstanding and the Company received 1.366 units of VICI OP in exchange for each MGP OP unit held by the Company. The fixed exchange ratio represents an agreed upon price of $43 per share of MGP Class A share to the five-day volume weighted average price of VICI stock as of the close of business on July 30, 2021. In connection with the exchange, VICI OP redeemed the majority of the Company’s VICI OP units for cash consideration of $4.4 billion, with the Company retaining an approximate 1% ownership interest in VICI OP that had a fair value of approximately $375 million. MGP’s Class B share that was held by the Company was cancelled. Accordingly, the Company no longer held a controlling interest in MGP and deconsolidated MGP upon the closing of the transactions. Further, the Company entered into an amended and restated master lease with VICI as discussed in Note 8. The Mandalay Bay and MGM Grand Las Vegas lease remained unchanged. In connection with the transactions, the Company recognized a $2.3 billion gain recorded within “Gain on REIT transactions, net.” The gain reflects the fair value of consideration received of $4.8 billion plus the carrying amount of noncontrolling interest immediately prior to the transactions of $3.2 billion less the net carrying value of the assets and liabilities and accumulated comprehensive income derecognized of $5.7 billion. The major classes of assets and liabilities derecognized were as follows:
| (In thousands)
Cash and cash equivalents | $ | 25,387 |
Income tax receivable | 5,486 |
Prepaid expenses and other | 128 |
Property and equipment, net | 9,250,519 |
Investments in and advances to unconsolidated affiliates | 817,901 |
Operating lease right-of-use assets, net | 236,255 |
Other long-term assets, net | 3,991 |
Total assets | $ | 10,339,667 |
Accounts payable | $ | 1,136 |
Accrued interest on long-term debt | 68,150 |
Other accrued liabilities | 4,057 |
Deferred income taxes, net | 1,284 |
Long-term debt, net | 4,259,473 |
Operating lease liabilities | 336,689 |
Total liabilities | $ | 4,670,789 |
The Mirage transaction. On December 19, 2022, the Company completed the sale of the operations of The Mirage to an affiliate of Seminole Hard Rock Entertainment, Inc. (“Hard Rock”) for cash consideration of $1.075 billion, or $1.1 billion, net of purchase price adjustments and transaction costs. At closing, the master lease between the Company and VICI was amended to remove The Mirage and to reflect a $90 million reduction in annual cash rent. Gold Strike Tunica. On February 15, 2023, the Company completed the sale of the operations of Gold Strike Tunica to CNE Gaming Holdings, LLC (“CNE”), a subsidiary of Cherokee Nation Business, for cash consideration of $450 million, or $474 million, net of purchase price adjustments and transaction costs. At closing, the master lease between the Company and VICI was amended to remove Gold Strike Tunica and to reflect a $40 million reduction in annual cash rent. The Company recognized a $399 million gain recorded within “Property transactions, net.” The gain reflects the net cash consideration less the net carrying value of the assets and liabilities derecognized of $75 million. The operations of Gold Strike Tunica are not classified as discontinued operations because the Company concluded that the sale is not a strategic shift that has a major effect on the Company’s operations or its financial results and it does not represent a major geographic segment or product line. The major classes of assets and liabilities derecognized are as follows:
| (In thousands)
Cash and cash equivalents | $ | 26,911 |
Accounts receivable, net | 2,466 |
Inventories | 1,087 |
Prepaid expenses and other | 1,522 |
Property and equipment, net | 21,300 |
Goodwill | 40,523 |
Other intangible assets, net | 5,700 |
Operating lease right-of-use assets, net | 507,231 |
Other long-term assets, net | 1,251 |
Total assets | $ | 607,991 |
Accounts payable | $ | 1,657 |
Other accrued liabilities | 13,778 |
Other long-term obligations | 1,707 |
Operating lease liabilities | 516,136 |
Total liabilities | $ | 533,278 |

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 805 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//805/tableOfContent Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Topic 205 -SubTopic 20 -Name Accounting Standards Codification -Publisher FASB -URI https://asc.fasb.org//205-20/tableOfContent + Details
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