Tuesday, June 15, 2004 | 10:47 a.m.
As the boards of directors of MGM MIRAGE and Mandalay Resort Group meet separately today to review details of the $7.9 billion deal that would form a dominating presence in the gaming industry, representatives of Las Vegas minority business communities began contemplating how the deal would affect opportunities for minority vendors.
Following Monday's announcement that MGM MIRAGE had prepared a counter offer after Mandalay rejected a $7.65 billion bid Friday, Mandalay officials said their board would meet today to consider the sweetened version of the deal, which offers $71 a share for the transaction, up $3 from the $68 a share given in the initial offer.
Mandalay officials cautioned that there are "no assurances that a definitive agreement will be reached."
The new offer was the latest peak in a wild roller coaster ride that began nearly two weeks ago. After more than a week of wrangling, Mandalay on Friday rejected MGM MIRAGE's bid, which included a requirement that Mandalay shareholders accept the risk if regulators killed the deal or required major asset sales because of antitrust laws.
At the time, Mandalay said the proposal would have given MGM MIRAGE a stranglehold on Mandalay's operations by giving MGM MIRAGE the option of terminating the deal after 15 months while regulators decided whether the deal passed regulatory muster.
The new bid from MGM MIRAGE not only offers a higher price but scraps the deal-killing provision.
Meanwhile, representatives of the Las Vegas minority business community are split over whether MGM MIRAGE's proposed acquisition of Mandalay would result in more opportunity for minority vendors and whether the joint company's diversity program would be any better than what currently exists.
Many business leaders, including Hannah Brown, president of the black-oriented Urban Chamber of Commerce, began considering the effects the acquisition would have before the revised deal was in play.
Brown said the blending of the two companies would be bad for the business community in general and minority business people specifically because there would be fewer outlets with which to develop contract relationships. She also said she isn't impressed enough with MGM MIRAGE's diversity program to see the merging of the companies as a good thing for minority employment.
"Bigger isn't always better," said Brown.
"I think competition is important to consumers as well as vendors," she said. "If you remove one of the big competitors from the field, it removes one of your options. Vendors are always looking for new opportunities, so you need more possibilities, not less."
As for MGM MIRAGE's diversity program, Brown said she doesn't feel the company has made enough strides in putting people of color in management positions.
"African Americans have always been able to get positions in lower levels, but not in the decision-making levels," Brown said. "If you're not preparing your people (for management positions), shame on you. It is incumbent upon employers to prepare those workers for management positions."
MGM MIRAGE is considered one of the leaders in diversity employment and minority procurement in the gaming industry. In April, the company said the percentage of minority workers the company employed climbed to 52.52 percent in 2003 from 51.65 percent in 2002. The company employs 41,000 people.
The percentage of minority management personnel is at about 29 percent and the company has broadened its contractual relationships with minority contractors.
The company also said it has fortified its business relationships with minority associations and organizations.
But Brown still feels minorities need to fill more meaningful positions.
"I won't be convinced that MGM (MIRAGE)'s diversity program could be effective for Mandalay until there are more people in key positions," she said. "I just don't see it."
Brown is not representative of what other minority business advocates say about the prospective acquisition.
"We're very excited about the merger," said Al Barber, president of the National Association of Minority Contractors, Nevada Chapter. "These are two companies that are committed to providing opportunities for minority contractors."
Barber said MGM MIRAGE's diversity leadership would deliver more opportunities to minorities because Mandalay would operate under the same philosophy. He said other chapters of the association also see the proposed acquisition as a positive.
"MGM MIRAGE is at the forefront of diversity and Mandalay has properties all over the United States," Barber said. "So this deal takes on a national ramification. Both companies have properties where the NMAC has chapters and they view this as a very positive thing for the entire association."
Otto Merida, executive director of the Latin Chamber of Commerce, said while some people view consolidation with suspicion, the public should recognize that it is the direction the industry is headed. And, he said, MGM MIRAGE has had a good track record on diversity matters.
"Unfortunately, this (consolidation) is where large corporations are going to be more competitive," Merida said. "But I don't see any problems. They (MGM MIRAGE) are at the forefront of the industry in the procurement of minority vendors. They have a nationally recognized program."
He said he is comfortable leaving it "in the hands of the (Nevada) Gaming Commission to determine if it is the right thing."
Bill Thompson, chairman of the Department of Public Administration at the University of Nevada, Las Vegas, said MGM MIRAGE's diversity program could be viewed as a positive by regulators who will consider whether the acquisition is in the public interest.
"Anything MGM has done positively in the community would be an asset," Thompson said. "The regulators are looking at a lot of different things: integrity, what will happen to the economy and what they're going to do with Circus Circus Reno are more important. (The diversity program) could overturn concerns that they'll dump properties. If they say, 'We're a good corporate citizen,' then that could allay some fears," Thompson said.
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