MGM Resorts International, the casino company founded by billionaire Kirk Kerkorian, will gain control over its Macao joint venture through steps including an initial public offering of some shares held by partner Pansy Ho.
Ho will sell as much as 23% of MGM China Holdings Ltd. in a Hong Kong IPO and an additional 1% to MGM Resorts, boosting the Las Vegas company’s stake in the Macao casino to 51%, the partners said Wednesday.
Through the new majority ownership, MGM Resorts will be able to consolidate the Macao operation on its books. MGM’s half stake delivered $129.6 million in operating income in 2010. The company follows Wynn Resorts Ltd. and Las Vegas Sands Corp. in listing a minority stake in its Macao venture, as gambling revenue in the world’s largest casino hub soars.
“Ownership in a property in Macao is the last thing any casino companies want to give up at this point because it’s growing so rapidly and it’s been so profitable,” said David Katz, a New York-based analyst with Jefferies & Co.
Shares of MGM Resorts, the largest casino operator on the Las Vegas Strip, rose $1.09, or 8.6%, to $13.70. The gain was the largest in the Russell 1,000 index.
Ho, a daughter of casino billionaire Stanley Ho, will also purchase $300 million of MGM Resorts’ convertible senior notes due in 2015. The agreements are subject to regulatory approval and the IPO should be completed by June 30, MGM Resorts said.