Mandalay owners OK merger

By Liz Benston (contact)

Monday, Dec. 13, 2004 | 10:32 a.m.

At a shareholder meeting that lasted all of a few minutes Friday, a majority of Mandalay Resort Group stock owners approved the company's merger with larger rival MGM Mirage.

The $7.9 billion deal, in which MGM Mirage is expected to swallow Mandalay by the end of March, is still subject to state and federal regulatory approvals.

The meeting, likely the company's last, began and ended without fanfare or any discussion of the merger. It also finished abruptly without any talk of the company's legacy or its stellar profits over the past year.

"Four minutes -- that must be a world record," one man said as he left the meeting room Friday.

Mandalay Resort Group President and Chief Financial Officer Glenn Schaeffer said afterward that the purpose of the meeting wasn't to glorify the company but to conduct the business at hand.

"We have the most famous single hotel in the world, Mandalay Bay, and shareholders in this company have made a lot of money over the years," Schaeffer said. "I think we're pretty capable at marketing and driving shareholder value, which is what's important."

The company, run by reclusive Chief Executive Mike Ensign, hasn't publicized itself as aggressively as some of its competitors on the Strip. But through Schaeffer, the public face of the company and a dynamic speaker, Mandalay has communicated effectively to Wall Street.

Circus Circus Enterprises Inc. owned the Circus Circus, Excalibur and Luxor casinos when it changed its name to Mandalay Resort Group in June 1999 to reflect that year's debut of Mandalay Bay.

Adjusted for stock splits, the company traded at around $2 a share when it went public in 1985 and is now trading at around 35 times that, Schaeffer said.

"We've distributed close to $2 billion in cash back to shareholders," said Schaeffer, who joined the company when it went public.

Mandalay's stock price has risen about 57 percent so far this year and its latest earnings for the fiscal third quarter rose 65 percent -- one of the strongest in the gaming industry and reflective of a company that has successfully evolved from a slot machine-driven casino giant to a more competitive resort and entertainment company.

Under Schaeffer, the company marketed its Mandalay Bay, Luxor and Excalibur casinos as a unit of three interconnected resorts and recently built a convention center, high-end retail mall as well as another new hotel tower at Mandalay Bay to boost business among luxury business and leisure travelers.

Hotel rooms, now 25 percent of company revenue, have become the principal driver of business in Las Vegas, the company said this month.

Schaeffer declined to discuss his future plans other than to say he will serve out his time with the company.

A graduate of the University of Iowa Writers' Workshop, Schaeffer established the International Institute of Modern Letters in Las Vegas and New Zealand, where he has a home and established that country's largest literary prize.

Shareholders leaving the meeting Friday said they were pleased with their investments in the company.

Shareholder Vic Bocki, who has lived in Las Vegas since 1963, said he expected more discussion about the MGM Mirage merger.

Bocki said he paid $42.50 per share for the company when it was still known as Circus Circus Enterprises and run by casino pioneer Bill Bennett.

"I took the money and ran," he said.

Bocki said MGM Mirage's offer of $71 per share represents a "fair price" and that the company will benefit from the land Mandalay has accumulated for development.

"You can't beat $71 per share," he said. "I just wish I'd bought at $13."

Ferdinand von Meyer, a shareholder from Ohio who also hoped to hear more about the MGM Mirage deal, said he was "surprised and disappointed" by the short meeting.

Von Meyer, a gambler and frequent Las Vegas visitor who said he voted against the merger, said he fears that it could mean higher prices for consumers.

"It's expensive to come here now. There are no more freebies," he said.

Von Meyer said he owns many gaming stocks and travels to shareholder meetings several times a year. He said he has no complaints about his investment in Mandalay, which he bought several years ago at about $19 per share.

Mandalay declined to reveal the number of shareholders who voted for or against the merger.

Shareholders also elected William E. Bannen, Jeffrey D. Benjamin and Rose McKinney-James to three-year terms on the company's board of directors and approved Deloitte & Touche LLP as the company's independent auditors for the coming year.