New tender boosts shares of MGM Mirage

The two companies are looking to pay no less than us$ 75 a share and no more than us$ 80 a share in the Dutch auction, which puts the premium at 7.2% to 14.3% over MGM’s

All of the purchases will have to come from the open market, however, as controlling shareholder Kirk Kerkorian’s Tracinda Corp. - which owns 52.4% of the company - will not tender any of its shares.

Dubai World already owns almost 7% of MGM and has a 50% interest in the company’s massive CityCenter - the largest privately-funded real estate development in U.S. history - on the Las Vegas Strip.

In late December, according to a filing with the Securities and Exchange Commission, the investment arm of the Dubai government raised its holding in the casino operator from 4.9% by buying 5 million shares at us$ 84.50 each from the Lincy Foundation, Kerkorian’s philanthropic vehicle.

An earlier tender form Dubai for up to 14.2 million MGM shares at us$ 84 a share expired in October, well short of its goal. Shares of MGM Mirage ended with a gain of us$ 3.81 at us$ 73.79. A year ago, it was trading at the us$ 58 level and ran up to just north of us$ 100 in October before falling back with the broader market.

"With the recent fall-off in the shares of MGM, there have been concerns about whether the prior tender offers by Dubai World and Tracinda Corp. have created only a perceived floor on the stock," wrote David Katz of CIBC.

"This morning’s tender offer by MGM and Dubai World supports our view that the support for the shares at the us$ 80 level is real rather than perceived."