KERKORIAN MAY SELL CASINO EMPIRE
The Calgary Herald (Alberta)
May 23, 2007 Wednesday
Final Edition
Shares of MGM Mirage rose the most ever on speculation Kirk Kerkorian
may sell his majority stake after the billionaire investor said
Tuesday he’ll consider alternatives for the investment.
Kerkorian’s Tracinda Corp. may split up MGM or turn it into a real
estate investment trust, Steven Kent, an analyst at Goldman, Sachs &
Co., told investors in a note. Shares of the world’s second-largest
casino company soared $17.03, or 27 per cent, to $79.98 on the New
York Stock Exchange.
"Everything is on the table," Kent said.
Tracinda, Kerkorian’s holding company, said Monday it intends to
negotiate the purchase of two Las Vegas Strip properties, the Bellagio
Hotel & Casino and the planned CityCenter complex. Tracinda is also
studying options including a "financial restructuring" for the rest
of the company.
"He has a history of buying and selling inside MGM Mirage, and it’s
been to everyone’s benefit," said Dan Ahrens, fund manager of Ladenburg
Thalman Gaming and Casino Fund in Dallas, which owns MGM shares. "A
lot of people have been saying that MGM was undervalued."
The 89-year-old Kerkorian, the son of an Armenian immigrant
rancher in California’s San Joaquin Valley, has bought and sold the
Metro-Goldwyn-Mayer Inc. movie studio three times since 1970. He
founded the MGM Grand Inc. casino company in the 1980s and acquired
Mirage Resorts Inc. in 2000 for $6.4 billion US.
Buyout firms might be attracted to MGM’s real estate and cash flow,
analysts said. Last year, Apollo Management and TPG Inc. agreed to
buy Harrah’s Entertainment Inc. for $17.1 billion. Las Vegas real
estate prices are soaring, with one property, the New Frontier &
Hotel, selling for almost $35 million an acre last week.
MGM’s net income increased 46 per cent in 2006 to $648 million, led
by a 17 per cent jump in revenue. Its stock price has gained eight
straight years.
It has 10 casinos on the Las Vegas Strip, including the Luxor and
Mandalay Bay.