The MGM Resorts International board of directors has approved a new $2bn repurchasing plan, marking one of the largest buyback plans in recent history.
This is one of the largest shareholder rewards plans since the beginning of the coronavirus pandemic. Previously, the pandemic caused casino operators to stop repurchasing efforts and cut or suspend dividends.
MGM Resorts is one of many casino operators that have added to the gaming industry's buyback initiative. Last month, Penn National Gaming unveiled a $750m buyback plan. Boyd Gaming also repurchased $300m last October. Golden Entertainment is speculated to announce repurchases as well.
Shares went up by 1% during after-hours trading when the buyback plan was announced. Once the market opened, the stock jumped 4.32% during the standard trading day. MGM Resorts also has $524.6m remaining under the February 2020 $3bn buyback plan.
It would seem the operator will look to use the remaining $524.6m before implementing the new $2bn plan. In February, there was $636.7m remaining, showing that in the span of a few weeks, $112.1m in shares were purchased.
In regards to the repurchasing plans, the casino operator said: “The company plans to utilize the remaining capacity under this repurchase plan prior to effecting any repurchases under the new $2.0bn repurchase program”.
MGM Resorts doesn’t have to repurchase all $2bn of the shares. Investors must pay taxes on dividends, but buybacks are tax-free to shareholders. CFO Jonathan Halkyard said: “We remain committed to our capital allocation strategy and continue to believe that returning cash to shareholders is a highly productive use of our capital”.
