2 Others Reportedly Weigh Bids for Mirage

Shares of casino operator Mirage Resorts Inc. rallied on Friday after a report that Harrah’s Entertainment Inc. and Park Place Entertainment Corp. may be considering bids to rival a $3.4-billion takeover offer from MGM Grand Inc.

Harrah’s declined to comment specifically about Mirage. But spokesman Gary Thompson said Harrah’s was “interested in any strategic acquisition that would add value for shareholders.”

Park Place was not immediately available for comment.

The Wall Street Journal, citing people close to Harrah’s and Park Place, said Friday that neither company was ready to pounce, but each was making serious financial calculations to determine whether a bid of its own was feasible.

Shares of Mirage rose 81 cents, or 5.7%, to close at $15 on the New York Stock Exchange. Harrah’s rose 38 to $20.31, while Park Place rose $1.50, or 14%, to $12.50. MGM Grand shares, however, fell $2.25, or 5%, to close at $39.19.

MGM Grand, controlled by billionaire Kirk Kerkorian, on Wednesday offered $17 a share in cash, or a combination of $7 a share in cash and $10 in stock, to buy Mirage Resorts, run by flamboyant casino magnate Steve Wynn.

The Journal report said senior management at Harrah’s discussed the situation at a regularly scheduled board meeting on Thursday morning.

Thompson confirmed that Harrah’s held a regularly scheduled board meeting but said he was not aware of what was discussed.

Bear Stearns analyst Jason Ader said it would make sense that Harrah’s and Park Place were considering their options.

“I think those are the two most active acquirers of gaming assets over the last several years,” Ader said. “It’s logical that they would be looking at Mirage to see if it makes sense,” he said.

However, analysts said they believe Harrah’s would be in a better position to make a rival bid for Mirage.

“I think Harrah’s definitely makes a lot of sense,” Prudential analyst Joseph Coccimiglio said. “We actually think Mirage and Harrah’s would be a good fit.”

Park Place may still be too busy digesting its acquisition last year of Caesar’s from Starwood Hotels & Resorts Worldwide Inc.

Personality issues between Wynn and Park Place Chief Executive Arthur Goldberg also could undermine a deal between the two.

Mirage Resorts has said it would consider MGM Grand’s bid at a board meeting in the near future. Mirage is expected to respond to MGM Grand’s offer early next week, analysts said.

Analysts said they expect Wynn to be reluctant to relinquish control of his vast gaming empire. But Mirage may face heavy pressure to accept the bid from shareholders who have watched the price of the stock drop from about $26 a share in May to just under $11 before MGM Grand announced its offer.

“If you’re an institutional shareholder, your stock is worth 60% less than a year ago and you’re not happy,” a merger trader said.

And a deal with MGM Grand may make the most sense, Ader of Bear Stearns said.

“Strategically, the best acquirer of Mirage is MGM,” he said, noting the potential for cost savings.

Ader said he believed MGM Grand could raise its bid for Mirage to the low $20-a-share range. Coccimiglio said he estimated MGM could raise its bid to $19 a share without hurting its earnings outlook.

But MGM Grand has said it has no plans to launch a hostile bid if Mirage rejects its offer, which expires on March 8.