Dubai government to buy a 9.5 stake in MGM Mirage

Under the deal, which MGM agreed to Tuesday, Dubai World will pay us$ 2.7 billion to acquire its stake in CityCenter, a high-end 30.7-hectare development of hotels, condos and retail set for a 2009 opening, the Journal said.

The investment firm is also to buy 14 million shares from MGM Mirage at us$ 84 each, or about us$ 1.2 billion, a premium of about 13 percent over Tuesday’s closing price of us$ 74.32 on the New York Stock Exchange. Dubai World also intends to buy an additional 14 million shares from public shareholders at about the same price, according to the newspaper.

The Journal said the deal capped a run of profitable moves by Kirk Kerkorian, the 90-year-old billionaire who three months ago appeared to signal that MGM Mirage might be for sale. Instead, he lured a wealthy investor willing to pay a premium price for a big stake in the company and invest in its biggest project, the newspaper said.

Dubai World will pay an additional us$ 100 million if CityCenter opens on budget and by the end of 2009, according to the report. Its investment gives MGM Mirage a us$ 3.9 billion cash infusion, the newspaper said. And Kerkorian’s stake in MGM Mirage will shrink slightly to 51.65 percent from 54.15 percent, the Journal said, but he will remain the majority shareholder through his investment firm, Tracinda Corp.

Dubai World holds a multibillion-dollar portfolio that includes British ports operator P&O. Its private equity arm, Istithmar, last year bought a majority stake in the Mandarin Oriental New York, acquired retailer Loehmann’s, the Knickerbocker Hotel in New York and office block 280 Park Ave. in April.