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MGM to invest overseas

Jun 3, 2003 6:55 AM

A week after an executive for MGM Mirage said the company planned to shift its focus away from the U.S. market to opportunities overseas, the gaming concern announced it had signed a deal to acquire a stake in a casino firm based in Great Britain.

MGM said last week it bought a 25 percent interest in Metro Casinos Ltd., which is now building a casino in Bristol that is set to open by the end of this year.

The company also said it would like to develop other casinos with the U.K. firm and back expansions of the England-based Westcliff Casino, operated by R.J. Brown Holdings, the parent company of Metro Casinos.

The agreement requires licensing approval by Great Britain gaming authorities. MGM also entered the deal hoping that the U.K. government, after years of consideration, finally adopts legal reforms that would expand casino gambling throughout Great Britain. 

The decision to enter the U.K. market came after MGM executives, faced with sagging revenues in Las Vegas and other U.S. markets, opted to search outside the United States for new sources of income.

The announcement also followed a weak performance for the company in the first quarter 2003, which caused many investors to unload the firm’s stock.

On May 23, during a conference put on by the Nevada Society of Certified Public Accountants, James Murren, MGM’s executive vice president and chief financial officer, said the company was looking to overseas markets, specifically Great Britain, for new gaming ventures.

"We’re spending a lot more time on the U.K.," Murren said, after saying that MGM was not ready to commit to a gaming project in Macau due to an unsure regulatory and government atmosphere in the Asian country.

"The returns are a lot higher outside the U.S. right now, so that is where we’re focusing," Murren said.

Terry Lanni, MGM’s chief executive officer, said last week that the company "is taking the necessary steps to position itself in the U.K. and intends to play a significant role in the development of the industry in the years to come."

MGM’s stock staged a rebound on the news of the U.K. deal. The stock brokerage firm Gerard Klauer Mattison that day raised its speculation on MGM stock to "outperform," saying that its shares were "expected to rise in the second half of the year."