MGM Mirage and Dubai World announced last week that they have agreed to form a long-term strategic relationship in which Dubai World will invest approximately $5 billion in MGM Mirage, including $2.7 billion in project CityCenter and up to $2.4 billion in purchases of MGM Mirage common stock.
The companies will enter into a 50/50 joint venture in the landmark CityCenter development in Las Vegas and Dubai World will acquire a significant minority equity position in MGM Mirage.
The joint venture, CityCenter Holdings LLC, will be owned equally by MGM Mirage and Infinity World Development Corp., a wholly-owned subsidiary of Dubai World.
Currently under construction between Bellagio and Monte Carlo resorts, CityCenter is a mixed-use luxury residential, resort and retail complex.
In addition to investing in the joint venture, Dubai World through Infinity World Investments, will purchase up to 28.4 million shares of MGM Mirage representing approximately a 9.5 percent equity stake.
Dubai World will seek to accomplish this through a combination of a public tender offer for 14.2 million shares of the outstanding stock at a price of $84 per share, which represents an approximate 13% premium over last week’s closing price, and an agreement to subsequently purchase an additional 14.2 million shares directly from the company at the same price, for a combined investment of approximately $2.4 billion.
The companies anticipate that the joint venture investment will close by the end of the year, and that the tender offer will commence this week.
In connection with the joint venture, Dubai World will initially contribute approximately $2.7 billion for 50 percent of the equity in CityCenter, which is valued at $5.4 billion.