(Reuters) - Activist hedge fund Starboard Value LP is building a stake in MGM Resorts MGM.N, two people familiar with the matter said on Thursday, as the U.S. hotel and casino operator comes under investor scrutiny over its profit targets.
MGM Resorts is aware of Starboard’s investment, the sources said, asking not to be identified because the matter is confidential. Starboard’s strategy for targeting MGM could not be immediately established.
“The company does not comment on market rumors”, MGM Resorts said in a statement. Starboard did not respond to a request for comment.
MGM Resorts shares rose 2 percent to $28.19 on the news, giving the company a market capitalization of $15 billion. The stock is down 17.4 percent over the last 12 months.
MGM Resorts has a portfolio of 28 hotels around the world, including in Macau and Shanghai.
Last week, MGM Resorts announced a plan to cut costs and boost growth. It said it expected to increase its annualized adjusted earnings before interest, taxes, depreciation and amortization by $300 million by the end of 2021.
MGM Resorts' smaller peer, Caesars Entertainment Corp CZR.O, rejected a merger approach by Tilman Fertitta, the billionaire owner of the Golden Nugget Casinos, last year.
Reporting by Svea Herbst-Bayliss and Greg Roumeliotis; Editing by Chizu Nomiyama and Susan Thomas
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