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MGM Completes 14M-Share Sale to Dubai World

LAS VEGAS- The developer of the Palm and World developments off the coast of Dubai now controls 4.8% of the casino operator's outstanding shares.

By Brian K. Miller | Updated on October 22, 2007

LAS VEGAS-MGM Mirage on Friday completed the sale of 14.2 million shares of its common stock to Infinity World Investments, a subsidiary of Dubai World, a conglomerate whose holdings include the developer of the Palm and World developments off the coast of Dubai. The transaction was part of deal where in Infinity World also acquired a 50% stake in MGM’s massive CityCenter development on the Las Vegas Strip for $2.7 billion and made an unsuccessful tender offer for an additional 14.2 million shares of MGM’s outstanding common stock.

The shares were issued directly by MGM Mirage to Infinity World Investments came from the company’s treasury shares. They were sold at $84 per share, more than $7 per share less than the company’s current share price. Add in the 348,838 shares it acquired on Oct. 5 through its tender offer at the same price, and the discount price is worth about $100 million. The deal was inked in August , when MGM’s share price was in the mid $70s per share. The share price was in the $90s when Infinity World had to go out with the tender offer in late August, which is why so few shares were tendered.

Infinity World now owns approximately 14.55 million shares of MGM Mirage common stock, 4.8% of all outstanding shares. Dubai World has agreed, subject to limited exceptions, not to acquire more than 20% of the outstanding shares of MGM Mirage’s common stock. Billionaire investor Kirk Kerkorian continues to control MGM Mirage through Tracinda Corp., which owns a 56% stake.

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