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Mirage Agrees to Sell to MGM Grand for $21 a Share

That's a substantial increase - 23.5 percent - over the original offer. On Feb. 23, MGM offered $17 a share. The offer then, and now, also includes MGM's assumption of $2 billion in Mirage debt.

The equity portion of the deal accepted today is $4.4 billion. With the debt, the package is $6.4 billion.

Today's announcement represents a victory for the wily old investor Kirk Kerkorian over Mirage's flamboyant chairman, Steve Wynn. Kerkorian, who has built the largest casino-hotels in Las Vegas, owns most of the stock in MGM.

Creatively, Wynn has no equal among major U.S. casino developers. He built the Mirage in 1989, which set a whole new tone for Las Vegas - a tone of sophisticated, expensive theming in place of the old formula of cheap buffets and tits 'n' ass revues.

His Treasure Island, opening in 1993, features an elaborate battle staged between a pirate ship and a British frigate in front of the entrance. Actors perform several times a day, giving passersby a free show. For the $1.9 billion Bellagio, which opened in 1998, Wynn spent $300 million on fine art that's displayed in a museum on the site.

But Mirage Resorts stock has taken a beating, in part due to the poor performance of another elaborate casino complex that Wynn built, Beau Rivage in Biloxi, Mississippi. That property opened a year ago, and results have been disappointing.

The company's stock traded as high as $26.38 last spring, but it was down to $10.875 when MGM announced the takeover offer.

Today's statement did not say what role Wynn would have in the combined company. But he is not expected to remain with it.

Jason Ader, senior analyst at Bear, Stearns Inc., speculated in a statement late this morning that Wynn mights acquire the Desert Inn and develop a luxury casino on its grounds on the northern of the Strip. A $275 million to sell the Desert Inn collapsed last week, and Wynn will get about $500 million for his stock in Mirage.

MGM Grand, the world's largest hotel, opened in 1993. It got off to a rocky start, but Kerkorian invested even more money and made major changes in management and in the physical structure. Its successful now, and competes with Mirage for high-end players.

Together, the companies will have a powerful roster of resorts. In addition to MGM Grand, the Mirage, Bellagio, Treasure Island and Beau Rivage, they own the Golden Nuggets in Las Vegas and Laughlin, Nevada; New York-New York; MGM Grand Detroit; Whiskey Pete's, Buffalo Bill's and the Primm Valley Resort in Primm, Nevada; and the MGM Grand in Darwin, Australia.

The companies also have a 50 percent stake in Monte Carlo on the Las Vegas Strip and manage casinos in South Africa. Both have land in Atlantic City that they plan to develop.

The deal is subject to the approval of Mirage shareholders and to the receipt of regulatory and governmental approvals. There is no financing contingency; MGM said it has the financing. The companies hope to conclude the transaction in the fourth quarter of this year.

In early afternoon trading, Mirage shares were up $2.81, at $18.69. MGM shares were up 38 cents, at $19.38.

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