The reaction of Magnesium metal with Iodine will yield Magnesium Iodide. The reaction would be as follows:
Mg (solid) + I2 (gas) ---> MgI2 (solid)
The two valence electrons of Mg will be distributed to each of the Iodine atoms in I2 gas. In the end, Mg ended up being Oxidized because it lose two electrons and I2 is reduced as it gained electrons.
MgI2 is classified as an ionic salt and it is highly soluble in water.