Top > Business > 2006 > November > 2006-11-28

Kerkorian to Sell 154 Million GM Shares

Tracinda Corporation, owned by Kirk Kerkorian, plans to offer up to 15 million shares of MGM Mirage Inc. at $55 a share, increasing its stake in other casinos, including the Bellagio to more than 60%. Tracinda is a privately owned company, owned solely by Kerkorian. The company owns 158.4 million shares of MGM Mirage, which represent 56.3% of the company`s stocks.

"This tender offer demonstrates our confidence in MGM Mirage and its management and our commitment to the company`s future," stated a representative for the company. The tender, potentially worth $825 million, represents 5.3% of MGM Mirage`s shares. This will increase Kerkorian`s stake to 61.7% of the company`s stocks. This $55 bid represents a 12% premium over the stock`s closing price - $49. The news caused the stock to soar, reaching a 52-week high of $54.24.

The MGM Mirage is America`s second largest casino company. It owns and operates the MGM Grand, the Luxor, the Bellagio, as well as, other casinos in Las Vegas and Atlantic City. Celeste Brown, an analyst for Morgan Stanley, conducted research on the tender. She says the tender does not appear to be a part of a larger buyout, but rather shows that the investors have faith in the MGM`s investment in Macau, set to open next year, as well as, the $7 billion CityCenter project due to open on the Las Vegas strip, in 2009. "What may appear to be expensive to the market on near-term numbers could look cheap to it over the long term," She said.