Two Way Hard Three | Las Vegas Casino & Design Blog

December 7, 2006

MGM Mirage Partners With UAE Firm

Posted by Hunter

MGM Mirage is planning a partnership with Mubadala Development, a firm headquartered in Abu Dhabi and owned by the royal family there.

There is talk of luxury hotel projects in several parts of the world including Las Vegas.

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Read archived comments (7 so far)
December 7, 2006 9:51 AM Posted by detroit1051

Does working with a firm owned by the government of UAE add any impetus to taking MGM private?

December 8, 2006 11:59 AM Posted by Redneck

I wouldnt think so in my opinion. Since kerkorian will soon own over 60% of MGM, he would not need another equity sponsor to partner with. Contrast this with the proposed buyout of Station by the Fertitas, where they only own a few percent of the company, and need to partner with an equity sponsor like colony capital to get minimum amount of equity required in a buyout. Most buyouts require a minimum of 20-30% percent equity with the rest funded by debt.

December 8, 2006 5:25 PM Posted by Leonard Stern

Redneck, You are correct in your comment that the Fertitta bros. needed to joint venture with a powerhouse like Colony in order for them to successfully be able to seemlessly take Stations private. However, the Fertitta bros., combined with other family investors such as the Sartinis', collectively control somewhere in the neighborhood of 30% of Stations stock at the present time. Certainly this figure does not represent "only a few percent" of the company. Unless a far more substantial, confirmed + viable offer is proposed by another private investment group (which is highly unlikely), even in light of the fact that a class action lawsuit has already been filed by several Stations' shareholders in an attempt to block the privatization, this deal is expected to eventually go thouugh without a hitch. Regarding Kerkorian, there is no doubt whatsoever that, based on MGM/MIRAGE's incredibly ambitious future plans, even CityCenter aside, Kerkorian's increased stake in MGM to nearly 62% indicates that he most probably intends on taking the company private at the most "opportune" time, that possibly occurring after the completion of CityCenter in 2009. If, and when, Tracinda decides to increase its current stake in MGM/MIRAGE (beyond 61.1%) and proposes to take the company private, you can be reasonably certain that the future of the existing gaming industry will forever be faced with an entirely new business model + obstacles that heretofore were never even a consideration. The present Harrah's private buyout offer(s) are far more complex, and will require substantially more time to [eventually] materialize, based on the structure of this public company as opposed to MGM/MIRAGE. What Kerkorian might possibly ultimately achieve is sole autonomy of MGM/MIRAGE by directing his extremely competent top executives (Terry Lanni + Jim Murren) to carry out his 'go-forward' intentions and stay out of the fray altogether, unlike Wynn who is totally incapable of following this management style. For all of you pro-Wynn supporters, you had better hope and pray that Okada continues to serve as Steve's "silent/obedient partner" long term when WYNN could itself eventually be the target of a private takeover, that will most likely require several more years in order for Wynn Resorts, Ltd. to be profitable enough + diversified to the extent of even being "considered as a takeover target" by major private equity investor(s).

December 8, 2006 9:19 PM Posted by Vegas Junky

From what I have heard Kerkorain has a big agenda item of taking MGM private and being in control. I don't think this will make much of a difference... Kerkorain has pockets and has an agenda, and will have more money as he liqudates GM.

December 9, 2006 9:46 AM Posted by Redneck

Your correct, I got the few percent number from a quick check of Yahoo's major holders listing.

December 13, 2006 6:43 AM Posted by detroit1051

MGM Mirage is certainly going to the next level, full speed ahead. It hasn't been "just a gaming company" for some time:
MGM MIRAGE in Discussions With Diaoyutai State Guesthouse for Joint Projects in China

December 15, 2006 11:46 AM Posted by cgriff

And yet a seaport management company cannot work with a firm owned by the government of the UAE without causing an international stink! Either the UAE can be a trusted business partner or it cannot, but logic demands consistency.