MGM shares fly over Dubai $84 offer

October 09, 2007 5:47 AM
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It seemed like a good idea at the time. Infinity World Investments, a unit of Dubai World, offered to buy 14.2 million shares of MGM MIRAGE Inc. (MGM) stock at $84 a share.

At the time, the shares were trading at $74 and the $10 markup looked attractive.

That thinking didn’t last long because traders immediately boosted the shares to a price higher than the offer price.

In fact, it moved up beyond the $90 level, making the offer look paltry at best. At the close of the offering period at midnight Friday the company said shareholders had tendered 348,903 shares, representing about 0.12% of the total available.

Two months ago, in a joint announcement, MGM MIRAGE and Dubai World said the oil-rich member of the United Arab Emirates would take a 9.5% stake in MGM MIRAGE and a 50% stake in MGM’s Las Vegas development, CityCenter. The deal called for an infusion of cash and the purchase of shares of newly-issued MGM shares as well as the purchase of shares from existing stockholders.

On Monday, Dubai World said it would complete the direct purchase from MGM MIRAGE of the 14.2 million shares at the agreed upon price of $84 per share. Once completed, the purchase will give Dubai World 4.9% ownership of the company.

As for investors, they remained bullish on Monday, pushing the price of MGM shares to $98.29.

Casino outlook

Massachusetts Gov. Deval Patrick’s plan for three casino licenses in the Bay State appears to be favored by a majority of citizens, according to a recent poll by the Boston Globe newspaper.

However, there also appeared to be a strong feeling that "As much as I would like it, I would not want it in my backyard."

But Patrick is already on record as insisting that local voters will have the power to approve or reject any gambling casino proposed for their community. According to Dan O’Connell, secretary of Housing and Economic Development for the Commonwealth, voter approval will have to come before a developer can submit a bid for one of the three licenses.

In the poll, 34% of respondents said they would oppose the casinos while another 12% said they had no opinion.

Costly habit

Lawmakers plan to pay for a new children’s health plan by raising the federal tax on a package of cigarettes to $1, up about sixty-five cents.

And, if Maryland Gov. Martin O’Malley, a Democrat, can get his budget proposal approved, highly-unlikely at the moment, he will raise the state tax on cigarettes by $2 a package.

The children’s health plan is expected to be vetoed by President George Bush but there just may be enough votes in both houses of Congress to override the veto.

In Maryland, however, O’Malley’s budget plan doesn’t seem to be going anywhere since it also includes legalizing slot machine gambling, a move that is staunchly opposed by House Speaker Michael Busch, also a Democrat, and by Senate Republicans led by Senate President Mike Miller.

Also, O’Malley’s call for a special session to address the budget problems is going nowhere.

Busch, who, with Miller, is against calling a special session, remarked, "I asked myself, what’s the incentive for members of the opposite party to come down here and vote for anything?"

Expansion opposed

Foes of a California plan to permit four Indian casinos to substantially expand their gaming floors say they have collected 700,000 signatures, or nearly twice as many as needed to seek a referendum.

Led by the state’s racetracks and other casino operators, the effort opposes Gov. Arnold Schwarzenegger’s recent agreement with the four casinos to permit them to add some 17,000 slot machines to their properties.

The tribes involved are the Morongo, Pechanga, Aqua Caliente and Sycuan.

Voters will go to the polls on Feb. 5.

THE INSIDER: Churchill Downs Inc. (CHDN) has named William E. Mudd, a long-time employee of General Electric Inc. (GE) to the position of executive vice president and chief financial officer. He succeeds Mike Miller who left in January to pursue other business interests.

Correcting a previous story, the Associated Press said the $0.05 per share quarterly dividend recently announced by Landry’ Restaurants Inc. (LNY) will be paid on Oct. 25 to shareholders of record on Oct. 10.

The $8.9 billion buyout of Station Casinos Inc. (STN) by the partnership of Fertitta family members of the real estate investment firm Colony Capital, has received the unanimous approval of the Nevada Gaming Control Board.

An upgrade by analysts at Morgan Joseph & Co. on Friday caused the shares of WMS Industries Inc. (WMS) to surge to a new 52-week of $34.20 per share. The analyst cited the company’s new products as well as Macau opportunities in his upgrade.

The Klamath Tribes of Oregon have announced a $43 million casino expansion in Chiloquin, Oregon.

There will be no night racing at the upcoming harness race meet at The Meadows Race Track because the lights have been removed. The operators have indicated they plan to hold the races in the daylight.

A Rhode Island state legislator has proposed keeping the state’s two gambling parlors open around the clock.

Bill McBeath, president of Bellagio, has been promoted by MGM MIRAGE Inc. (MGM) to the newly-created post of president and chief operating officer of the new resort/hotel being built as part of CityCenter.