MGM Grand in deal to buy rival casino company Mirage Resorts for $4.4 billion

Robert Macy

Monday, March 6, 2000 | 9:48 a.m.

Casino owner MGM Grand Inc. reached a deal to buy Mirage Resorts Inc. for $4.4 billion in cash today after raising its initial offer for its rival.

The deal will combine some of the most striking assets in the gambling industry, including Mirage's $1.6 billion Bellagio resort and MGM's 5,005-room MGM Grand hotel-casino, the largest hotel in America.

It also involves two of the casino industry's most powerful figures, Mirage chairman Steve Wynn and MGM majority stockholder Kirk Kerkorian.

Under the pact, MGM Grand will pay $21 a share for all Mirage shares. That is up from its initial offer of $17 a share that Mirage called inadequate.

The deal, which was hammered out over the weekend, also includes the assumption by MGM of $2 billion in Mirage debt.

Jason Ader, a casino analyst with Bear, Stearns & Co., said the flamboyant Wynn "is not going to have a role in the new company."

Two sources familiar with the negotiations who requested anonymity also told The Associated Press that Wynn would not remain with the merged company.

"He will play no role," one source said.

"I would be surprised if he stays with the company," said the other source. "I suspect he'll be moving on to other opportunities."

Wynn, 58, owns 23 million shares of Mirage stock or 12 percent of the company. The deal would bring him $483 million.

Wynn might build something new, purchase an existing facility or "might do nothing in gaming and just do a hotel," one source said. "He's at the point in his life when he can take his time and think about what he wants to be when he grows up. He hasn't made any definitive plans. It will probably be months before he does."

A joint news release from the two companies said the merger deal was expected to close in the fourth quarter of 2000.

It is expected the new company will retain the MGM name.

One source said Mirage President Bobby Baldwin and other Mirage officials met with MGM executives Thursday. On Friday after the stock market closed MGM sent Mirage an offer of $21 a share, the Mirage asking price. Mirage accepted and work began on a definitive agreement, which was signed about 6 a.m. PST today.

J. Terrence Lanni, chairman of MGM Grand, said that with the acquisition, MGM achieve "a dream combination of assets and people, a combination that creates unquestionably the premier company in the gaming industry."

Wynn said the deal "fully embraces the value of the franchise created by each of the Mirage properties."

The latest deal sweetened an originial offer MGM made Feb. 23 of $17 a share for Mirage. Mirage board members rejected that bid as too low, setting up negotiations between principals of the two companies for a deal more palatable to Mirage stockholders.

The combined companies will include 14 properties.

Mirage owns the Bellagio, Mirage, Treasure Island and Golden Nugget resorts in Las Vegas, Beau Rivage in Biloxi, Miss. and the Golden Nugget in Laughlin, Nev. The company also owns half interest in the Monte Carlo hotel-casino here. Plans are currently underway for a new mega-resort in Atlantic City.

MGM Grand's properties include the MGM, New York-New York, three properties at Primm, Nev. and casinos in Detroit and Darwin, Australia.

The two companies also have extensive undeveloped acreage in Nevada, New Jersey and Mississippi for future growth.

Wynn initiated the current mega-resort boom here with the opening of the flagship Mirage in 1989, sparking a casino splurge that has made Las Vegas the fastest-growing city in America.

Kerkorian built the largest hotel in the world here three times - first the International, which is now the Las Vegas Hilton; then the former MGM Grand, which is now Ballys-Las Vegas, and the current MGM Grand, which was the world's largest when it opened in 1993.