Kerkorian weighs up his casino options
NEW YORK — Kirk Kerkorian, the billionaire with 56% of MGM Mirage, will consider “alternatives” for his investment in the world’s second-largest casino
group. He is to start talks to buy two of its Las Vegas properties.
Tracinda, Kerkorian’s holding company, said this week it intended to negotiate the purchase of the Bellagio Hotel & Casino
and the CityCenter complex, now being built. Tracinda was also studying options such as a group financial restructuring.
“This will put them in play,” said Matt Sodl, an investment banker with Los Angeles-based Innovation Capital. “It’s a very aggressive move.”
Tracinda, in bidding for the Bellagio, was pursuing the “jewel in MGM’s portfolio”, said UBS Securities analyst Robin Farley.
MGM’s share price rose 16% to $73,01 in extended US trading on Monday.
Kerkorian tried in November to buy up to 15-million extra MGM shares, or a 5,3% stake, at $55, but managed less than 1% as prices soared. His stake is now valued at $10bn, almost double its value in August.
Buyout firms may be attracted to casino companies’ real estate and cash flow, analysts said. Last year, Apollo Management and TPG agreed to buy Harrah’s Entertainment for $17,1bn. Las Vegas real estate prices are soaring, with one property, the New Frontier & Hotel, selling last week for almost $35m an acre (0,4ha).
MGM said its board would “respond in due course”.
The group’s net income rose 46% last year to $648m, led by a 17% jump in revenue. The share price has gained for eight years running, and was up 9,8% so far this year before Monday’s news.
Kerkorian, son of an Armenian immigrant rancher in California’s San Joaquin Valley, has bought and sold the MetroGoldwyn-Mayer film studio three times since 1970. He founded the MGM Grand casino
company in the 1980s, and bought Mirage Resorts in 2000 for $6,4bn.
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