Kerkorian seeks own slice of Strip
Billionaire Kirk Kerkorian already owns a controlling 56% stake of MGM Mirage, one of the world’s largest hotel and gaming companies.
Which is why investors found the enigmatic Los Angeles investor’s latest move all the more puzzling: He wants to carve out for himself two of the company’s prized landmarks on the Las Vegas Strip.
Kerkorian’s Tracinda Corp. disclosed Monday in a Securities and Exchange Commission filing that it wanted to start negotiations to purchase the upscale Bellagio casino-resort and the CityCenter property, where work is underway for the nation’s largest privately financed project.
Kerkorian’s investment arm said the purchase would be part of a strategic restructuring of its holdings in MGM Mirage, which owns roughly half of the Strip, including such signature properties as the MGM Grand, Mandalay Bay, Mirage and New York New York. It operates 23 casino-resorts worldwide.
Kerkorian, who turns 90 next month, has long bedeviled investors with his moves on his way to earning a fortune that Forbes magazine estimates at $15 billion. Speculation about the motives for his overtures included wanting to put MGM Mirage in play or prodding it to go private.
A formal bid could come as early as today during a meeting of directors at MGM’s annual meeting of shareholders.
The bid follows Kerkorian’s failed effort to boost his stake in MGM Mirage. It also comes a week after Kerkorian’s Tracinda lost a bid to purchase DaimlerChrysler’s Chrysler Group. Previously, he tangled with General Motors Corp.
So far no formal proposal has been announced, but one executive familiar with the strategy said Kerkorian believed that MGM Mirage’s stock price didn’t reflect the value of the two assets he would like to own outright.
The $7-billion CityCenter project is particularly attractive, these people said. When it opens in 2009, the mega-resort will include a hotel-casino, convention center, retail and entertainment space, condominiums and two boutique hotels, all nestled between the Bellagio and Monte Carlo hotel-casinos on the site of the old Boardwalk Hotel and Casino.
The Bellagio was opened in 1998 by gaming mogul Steve Wynn’s Mirage Resorts, which MGM Grand acquired for $4.4 billion in 2000.
MGM Mirage shares soared 16% to $73.01 in after-hours trading Monday and the announcement helped fuel a rise in shares of other gaming companies.
Kerkorian has long operated through Beverly Hills-based Tracinda, a meshing of the names of daughters Tracy and Linda. If his past deals are any indication, he is unlikely to hold on to the properties for long.
He has made a fortune buying and selling assets, including the Desert Inn and the Sands casino resorts in Las Vegas. In Hollywood, Kerkorian owned the fabled MGM studio three separate times.
The move to take all or part of MGM Mirage private represents an increasingly common practice in the gambling industry, said David Schwartz, director of Center for Gaming Research at the University of Nevada Las Vegas. Harrah’s Entertainment Inc. and Station Casinos Inc. are both being sold to private equity groups or being taken private by majority owners.
“I don’t know what his motivation would be, but it is part of a trend and so it does make a lot of sense in that respect,” Schwartz said.
