On January 10th, 2008, both MGM Mirage and state run investment organization Dubai commented that they will spend a total of $800 million to both buy MGM shares in the latest activity aimed at increasing Dubai’s stake in the company. Both MGM and Dubai World plans to make an offer for ten million shares valued between $75 up to $80, a premium of around 7.2% up to 14.3% over Tuesday’s closing price. The shares of the casino improved 4.4%.
Kirk Kerkorian’s Tracinda Organization, which is the holder of the 52.4% of the shares of MGM, does not plan to sell any of its shares in MGM. Dubai World will buy the fifty percent of the shares that are currently in sale. If all of the ten million shares sold, the current stake of Dubai World will improve from 6.6% up to 8.4%. Dubai World has been steadily enlarging its stake in MGM, which also manages eleven casino facilities in Las Vegas like the Bellagio, Luxor and New York.
The buyout follows the previous purchase of five million MGM shares of Kirk Kerkorian’s Lincy group in December. In that previous buyout, Dubai World shelled out $424 million or $84.80 per share. Dubai World started increasing its shares in MGM back in August 2007 as part of the deal that will include the buyout of 14.2 million shares from MGM and the buyout of the fifty percent shares in MGM’s CityCenter endeavor in Las Vegas, Nevada.