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MGM Mirage Inc boosts joint offer with Dubai World

Casino operator MGM Mirage Inc was to announce yesterday it was increasing its joint tender offer with Dubai World for MGM Mirage shares by 50 percent to 15 million and setting the price at US$80, an executive said.

The revised tender offer, at a 20 percent premium over the stock's most recent closing price, came after a MGM Mirage board meeting on Tuesday in which directors discussed surging revenues owing to the weak US dollar, president Jim Murren said.

"We're a beneficiary to the degree that America's on sale," said Murren, also the company's chief operating officer. "There is a significant, very material influx of visitors coming to the United States, either from Canada, where the dollar's at parity, or from Asia, or from Europe, and they're finding great value here in America and certainly in Las Vegas"

"We clearly think [MGM Mirage] is undervalued, as does Dubai," Murren said.

MGM Mirage and Dubai World, the investment arm of the Dubai government, announced an offer last week to buy 10 million MGM Mirage common shares in the range of US$75 to US$80 each.

The shares fell US$3.17, or 4.6 percent, to close at US$66.47 on Tuesday.

Under the revised offer, Dubai World would buy 6.5 million of the shares offered, increasing its stake in the company to 9.4 percent, while MGM Mirage would buy 8.5 million. The company plans to file the tender offer today, likely opening the window for sellers for 20 business days, Murren said.

Tracinda Corp, the investment arm of billionaire Kirk Kerkorian, will not sell shares. Because of the company share buyback, Tracinda's stake in MGM Mirage would increase 1.5 percentage points to 53.9 percent.

MGM Mirage has about 293.8 million shares outstanding.

The move reflects the company's view that market nervousness over consumer spending has given it a buying opportunity in an industry that has, in the past, succeeded through economic downturns.

"Historically, gaming has been extremely resilient, very durable and held up better than almost any other sector during recessions," Murren said. "I frankly think that Las Vegas will repeat that experience."

The revised offer also allows Dubai World to increase its stake in MGM Mirage up to the point where it would need to get licensed by gambling regulators, Murren said. It has a standing agreement that it can buy up to a 20 percent stake.

MGM Mirage, which opened the US$1.25 billion MGM Grand Macau in the Chinese casino mecca on Dec. 18, is also building the US$7.8 billion CityCenter on the Las Vegas Strip in a 50-50 venture with Dubai World that is set to open late next year.
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