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In an effort to jump-start the company's sagging stock price, MGM Mirage and joint venture partner Dubai World said Wednesday they are offering to buy up to 10 million shares of the casino operator's stock for between $75 and $80 a share.
Dubai World, the investment arm of the Persian Gulf state of Dubai, now owns more than 19.5 million shares of MGM Mirage, which is approximately 6.7 percent of the casino company. Dubai World also owns half of the $7.8 billion CityCenter development.
Since Dubai World raised its stake in MGM Mirage, the company's stock price has fallen roughly 17 percent in value on the New York Stock Exchange. In a Securities and Exchange Commission filing, MGM Mirage said the offer price amounted to a 7.2 percent to 14.3 percent premium over the closing stock price of $69.98 Tuesday. MGM Mirage has almost 294 million shares outstanding.
"Shares of MGM have been weak along with the rest of the gaming sector and the consumer stocks on fears of a recession," Deutsche Bank gaming analyst Bill Lerner said in a note to investors. "This offer provides assurance for investors in an uncertain climate. Casino stocks have historically been resistant to economic weakness, while MGM's full pipeline of new opportunities plus its growing hospitality segment lends value longer term."
The announcement initially sent shares of MGM Mirage up more than 5 percent in initial trading. By the end of Wednesday, MGM Mirage closed at $73.79, up $3.81 or 5.44 percent. More than 4.3 million shares were traded, four times the average daily volume.
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