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DUBAI AND LAS VEGAS, Nevada -- MGM Mirage joint-venture partner Dubai World received permission Tuesday from Michigan gaming regulators to increase its ownership in the casino giant to almost 15 percent.
The investment arm of the Persian Gulf state now controls 9.4 percent of the Las Vegas-based gaming company and separately owns half of the massive $8.4 billion CityCenter project, which MGM Mirage is developing on the Strip.
Dubai World has an agreement with MGM Mirage allowing it to acquire up to 20 percent of MGM Mirage's common stock.
The ruling by the Michigan Gaming Control Board came a day after Dubai World Chairman Sultan Ahmed bin Sulayem told Zawya Dow Jones the company had no plans to increase its stake in MGM Mirage. Shares of the casino operator fell more than 5 percent on Monday after Oppenheimer & Co. downgraded the stock to "perform" from "outperform."
Dubai World spent $80 a share, more than $2 billion, to acquire its current stake of almost 25 million shares in MGM Mirage. On Tuesday, shares of the company closed at $57.80 on the New York Stock Exchange, down 8 cents or 0.14 percent.
Gaming law in Michigan, where MGM Mirage operates the MGM Grand Detroit, requires prior approval before an investor exceeds 10 percent ownership in a casino company.
"The board unanimously approved the application. This will allow Dubai World to increase its stake in MGM if it wishes," Eric Bush, administrative manager for the Michigan Gaming Control Board told Zawya Dow Jones Tuesday.
Nevada gaming regulators don't require prior approval, but an investor must file a licensing application with the state once the 10 percent threshold is crossed. Dubai World applied for a gaming license with Nevada last year because of the investment arm's 50 percent ownership of CityCenter. Gaming Control Board member Mark Clayton said Tuesday a licensing investigation is under way.
Dubai World bought its stake in casino operator MGM Mirage last year, initially taking a 4.9 percent ownership that increased to 9.4 percent in February.
"Our company is encouraged by the Dubai World investment, as it expresses further confidence in our company and our brands," MGM Mirage Chief Financial Officer Dan D'Arrigo said in an e-mailed statement. "We look forward to a successful, long-term relationship."
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