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Best of Howard Stutz

Gaming Guru

Howard Stutz

Tender offer from MGM Mirage close to 102 million shares

18 February 2008

LAS VEAGS, Nevadda -- MGM Mirage investors tendered almost 102 million shares of the company's stock after the casino and joint-venture partner Dubai World offered to buy up to 15 million shares at $80 a share.

The company said Friday it would repurchase the shares on a prorated basis. The final number of shares tendered and the proration factor are still to be determined.

MGM Mirage announced the offer in January seeking to boost its stock price, which had slumped over the last few months. On Oct. 9, the share price hit $99.75.

MGM shares continued to fall Friday, closing the week at $66.14 on the New York Stock Exchange, off $4.23 or 6.01 percent. The tender offer marked a 20 percent premium on the company's price in January.

Through the tender offer, MGM Mirage said it would purchase 8.5 million shares while Dubai World, the investment arm of the Persian Gulf state of Dubai, would buy 6.5 million shares. The total combined purchase price was $1.2 billion.

MGM Mirage has 294 million shares outstanding.

Dubai World now owns more than 19.5 million shares of MGM Mirage, which is approximately 6.7 percent of the casino company. If it completes the buyback, Dubai World's stake would raise to 9.4 percent. Dubai World also owns half of the $8.1 billion to $8.4 billion CityCenter development.

MGM Mirage's majority stockholder, Los Angeles billionaire Kirk Kerkorian, controls more 153.8 million shares of MGM Mirage through Tracinda Corp., his privately held investment arm. Tracinda said it would not sell any shares as part of the transaction. If the buyback is completed in full, Kerkorian's stake in MGM Mirage would increase 1.5 percentage points to 53.9 percent.

Wall Street gaming analysts had supported the stock buyback, saying MGM Mirage's shares are undervalued.

Tender offer from MGM Mirage close to 102 million shares is republished from