Dubai World can boost stake in MGM Mirage

NEW YORK - MGM Mirage's second-biggest shareholder, Dubai World, can raise its stake in the company after New Jersey regulators gave it permission to own as much as 20 per cent. of the world's second-largest casino operator.

By (Bloomberg)

  • Follow us on
  • google-news
  • whatsapp
  • telegram

Published: Mon 25 Aug 2008, 12:00 AM

Last updated: Sun 5 Apr 2015, 11:56 AM

MGM rose 20 per cent in New York trading on the news. The New Jersey Casino Control Commission approved the application of the Dubai government investment group, commission spokesman Daniel Heneghan said in a telephone interview. The Dubai group currently owns 9.4 per cent of MGM, according to data compiled by Bloomberg.

Dubai World can raise its MGM share to 14.75 per cent. It still needs permission from Michigan's regulators before it can make a 20 per cent investment in the Las Vegas-based company, Lawrence Klatzkin, an analyst at Jefferies & Co. in New York, said in an e-mail to clients. He owns MGM shares.

Dubai World 'will definitely increase their stake,' Klatzkin said in an interview. 'It's when, not if. The stock is cheap.' MGM has lost 58 per cent of its stock market value in the past 12 months.

MGM jumped $5.52 to $33.25 at 4:15 p.m. in New York Stock Exchange composite trading, the steepest increase since May 22, 2007.

Representatives for Infinity World and World View Communications, two Dubai World units, didn't immediately respond to messages left after regular business hours. Yvette Monet, an MGM spokeswoman, didn't immediately return a phone message.

Permission required

The biggest casino investors need permission from US states for some transactions. The Michigan Gaming Control Board approved Dubai World's request for permission to own as much as 14.75 per cent in April.

Representatives of Dubai World testified at the New Jersey commission's hearings yesterday, Klatzkin said. Dubai World said last year that it would invest as much as $5.1 billion to buy 28.4 million shares, or about a 10th of the casino company, plus a 50 per cent stake in CityCenter, an MGM hotel and casino development in Las Vegas.

Dubai World Chairman Sultan Ahmed bin Sulayem said last August that Dubai has an option to increase its stake to as much as 20 per cent. MGM is majority-owned by billionaire investor Kirk Kerkorian.

Dubai's Infinity World unit had requested permission to raise its share as part of its 'interim casino authorisation,' applications filed with New Jersey regulators, Heneghan said.

More news from