MGM Mirage board taps panel to study Tracinda bid
Shares of MGM Mirage settled down Wednesday while the company’s board of directors appointed a three-person committee to study a move by Tracinda Corp. to acquire two of the company’s largest properties.
Tracinda, the privately held investment arm of MGM Mirage majority stockholder Kirk Kerkorian, said Monday it wanted to buy the Bellagio and the CityCenter development. The announcement sent shares of MGM Mirage up more than 27 percent on Tuesday.
On Wednesday, the company’s stock price retreated on the New York Stock Exchange to close at $78.40, down $1.58, or 1.98 percent. More than 6 million shares of MGM Mirage were traded, compared with 19.2 million shares exchanged Tuesday.
MGM Mirage’s board of directors met all day Tuesday following the company’s annual shareholder meeting. In a statement, the company said three of its nonmanagement board members unaffiliated with Kerkorian’s Tracinda, would study the matter and consider any strategic alternatives.
Sources at MGM Mirage said the committee would be made up of Roland Hernandez, the former chairman of Spanish language-television giant Telemundo; Rose McKinney-James, a Las Vegas-based energy consultant and lobbyist, and former Gov. Kenny Guinn, who was appointed to the board of directors on Tuesday.
“There can be no assurances that this process will result in any specific transactions,” MGM Mirage said in a statement. The company also didn’t expect to disclose any developments regarding possible strategic alternatives.
Kerkorian, an 89-year-old Los Angeles-based billionaire investor, owns 56 percent of MGM Mirage and is a member of the board. In its filing with the Securities and Exchange Commission, Tracinda said it wanted to pursue “strategic alternatives” related to its majority stake in MGM Mirage.
Wall Street observers continued to speculate on what might happen between Kerkorian and MGM Mirage.
Deutsche Bank gaming analyst Bill Lerner said the combined Bellagio-CityCenter purchase would cost between $10 billion and $12 billion, based on cash flow from the Strip casino and recent Strip land sales and acquisitions.
“A broad range of outcomes from the Tracinda initiative is possible, from nothing at all to a sale of numerous assets beyond Bellagio and CityCenter,” Lerner said.