Dubai World aims for 20% stake in MGM Mirage
by Shweta Jain
Last Update at 12:38:21 AM on December 30, 2007
(REUTERS)
Dubai World yesterday said it will continue to build its stake in
US-based MGM Mirage, the world’s second largest entertainment and
leisure company, until it reaches the 20 per cent mark, a senior
executive said.
The conglomerate increased its stake in MGM to 6.5 per cent last week.
`Our intention is to increase our stake in MGM to 20 per cent
eventually. Now it can take one, two or even 20 years but there is a
strategy we are following to reach that mark,’ Dubai World Chairman
Sultan Ahmed bin Sulayem told Emirates Business in an interview.
Without divulging details of the strategy, Bin Sulayem said: `We will
keep buying stakes in MGM whenever we feel there is an opportunity to
do so.’
He did not elaborate whether the acquisition would be through the
market or via issue of new shares.
Dubai World said on Friday it has bought an additional five million
shares of MGM Mirage for $242 million (Dh888m) (or $84.80 per share),
from billionaire investor Kirk Kerkorian’s charity – Lincy Foundation
– according to a filing with the US Securities and Exchange
Commission.
The holding company now owns 19.5 million shares of MGM, which owns
the Bellagio and Luxor hotels in Nevada, United States. Kerkorian is
the Chairman of Tracinda, which holds more than 51 per cent of MGM
Mirage’s shares.
When asked what methods Dubai World would adopt in the future to
increase its stake in MGM, Bin Sulayem said: `We will always have
three choices for increasing our stake in MGM – buying from
institutions, from markets or directly from the company. It is
eventually up to our board which way to take and when. The board
members decide the final path. `For now, I will say that MGM Mirage
is good and a stable company and we are very comfortable with the
company.’
The hotel operator had about 299.4 million shares outstanding as of
September 30, according to the Securities and Exchange Commission
filing.
The move comes four months after Dubai World and MGM Mirage entered an
agreement in August to jointly develop MGM Mirage’s $2.7 billion
CityCenter mega resort development on Las Vegas Strip, scheduled to
open by 2009.
As part of that deal, Dubai World purchased 14.2 million shares from
MGM, which included a 50 per cent stake in the CityCenter
developement.
The purchases would have given Dubai World a 9.5 per cent stake in MGM
but investors had turned down Dubai World’s offer at that time, as
theoffer price was well below what holders could get on the open
market. The recent purchase, however, brings Dubai World closer to its
goal of buying as muchas 28.4 million shares.
MGM, Kerzner International Holdings and Istithmar Hotels had finalised
joint venture agreements in September to develop the
multi-billion-dollar Nevada resort.