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MGM Mirage to Get U.S. Clearance to Acquire Mandalay (Update1)
Jan. 13 (Bloomberg) -- MGM Mirage, the casino operator controlled by
billionaire Kirk Kerkorian, will win U.S. Federal Trade Commission
approval for a $4.8 billion takeover of Mandalay Resort Group without
having to sell any Las Vegas casinos, people familiar with the matter
said.
The combination of MGM Mirage, the world's third-largest casino
operator, and Mandalay would create the world's largest
gambling-resort company. The proposed combination of No. 2 Harrah's
Entertainment Inc. and Caesars Entertainment Inc., the industry
leader, would supplant MGM Mirage and Mandalay as the world's biggest
if the FTC approves that takeover. Harrah's offered to buy Caesars for
$5.18 billion in July.
FTC lawyers have concluded they lack evidence that the MGM
Mirage-Mandalay combination would lead to higher room rates or fewer
promotional discounts aimed at luring customers to the gaming tables,
the people said. Together, the two companies would own almost half the
hotel rooms on the Las Vegas Strip, a four- mile stretch of Las Vegas
Boulevard between downtown and the airport.
The five-member Federal Trade Commission seldom overrules its staff.
MGM Mirage agreed to pay $71 for each Mandalay share. Mandalay shares
rose 10 cents to $70.61 as of 1:20 p.m. in New York Stock Exchange
composite trading. MGM Mirage shares rose 66 cents to $75.11.
``We are confident we will be able to close the transaction by the end
of the first quarter,'' MGM Mirage spokesman Alan Feldman said. An FTC
spokeswoman didn't immediately return a call seeking comment.
Much Competition
The FTC staff can't refute the companies' argument that casino hotels
on the Strip, where MGM Mirage and Mandalay together operate 10
casino-hotels, isn't a distinct market, people familiar with the case
said. That's because casinos on the Strip face competition from those
in downtown Las Vegas, the Bahamas, and some operated by American
Indian tribes in California and Connecticut, they said.
Las Vegas also faces competition from luxury casinos in Australia and
Macao.
To block a proposed merger, the government must prove that companies
seeking to combine would gain power to raise prices in a distinct
market.
MGM Mirage operates the Bellagio, the Mirage, MGM Grand, the Boardwalk
and the Treasure Island casino resorts on the Strip. Mandalay Resort
Group owns Mandalay Bay, Luxor, Excalibur, Monte Carlo and Circus
Circus. Mandalay, based in Las Vegas, also operates casinos in four
other Nevada cities, including Reno, as well as in Tunica,
Mississippi, and Elgin, Illinois.
State Approvals
The companies must also get approval from gambling regulators in
Nevada and Illinois. MGM Mirage's Feldman said the company hopes to
get a February hearing before the Nevada Gaming Commission on its
application. Mandalay operates the Grand Victoria riverboat casino in
Elgin, about 40 miles northwest of Chicago.
MGM Mirage said last month it is considering selling one of two
Michigan casinos to comply with the state's antitrust law. The
company, which originally said it would sell Mandalay's 53.5 percent
stake in the MotorCity casino in Detroit, said it was weighing offers
for its Michigan property.
MGM Mirage, based in Las Vegas, also operates casino resorts in the
Primm Valley area 25 miles south of Las Vegas near the California
border and another in Biloxi, Mississippi.
Harrah's and Caesars will sell four casinos for $1.24 billion in cash
to Colony Capital LLC as part of their attempt to win regulatory
approval for their combination. The companies said they would sell two
casinos in Tunica, Mississippi, one in Atlantic City, New Jersey, and
another in East Chicago, Indiana.
Last June, the FTC cleared Harrah's $916 million purchase of Horseshoe
Gaming Holding Co. eight months after the deal was announced. The
agency required no divestitures. The takeover gave Harrah's ownership
of Binion's Horseshoe Casino & Hotel in downtown Las Vegas, along with
casinos in Mississippi, Louisiana and Indiana.
To contact the reporter on this story:
James Rowley at [email protected]
To contact the editor responsible for this story:
Glenn Hall at [email protected]
Last Updated: January 13, 2005 13:26 EST
From: Emil Lazarian | Ararat NewsPress
Jan. 13 (Bloomberg) -- MGM Mirage, the casino operator controlled by
billionaire Kirk Kerkorian, will win U.S. Federal Trade Commission
approval for a $4.8 billion takeover of Mandalay Resort Group without
having to sell any Las Vegas casinos, people familiar with the matter
said.
The combination of MGM Mirage, the world's third-largest casino
operator, and Mandalay would create the world's largest
gambling-resort company. The proposed combination of No. 2 Harrah's
Entertainment Inc. and Caesars Entertainment Inc., the industry
leader, would supplant MGM Mirage and Mandalay as the world's biggest
if the FTC approves that takeover. Harrah's offered to buy Caesars for
$5.18 billion in July.
FTC lawyers have concluded they lack evidence that the MGM
Mirage-Mandalay combination would lead to higher room rates or fewer
promotional discounts aimed at luring customers to the gaming tables,
the people said. Together, the two companies would own almost half the
hotel rooms on the Las Vegas Strip, a four- mile stretch of Las Vegas
Boulevard between downtown and the airport.
The five-member Federal Trade Commission seldom overrules its staff.
MGM Mirage agreed to pay $71 for each Mandalay share. Mandalay shares
rose 10 cents to $70.61 as of 1:20 p.m. in New York Stock Exchange
composite trading. MGM Mirage shares rose 66 cents to $75.11.
``We are confident we will be able to close the transaction by the end
of the first quarter,'' MGM Mirage spokesman Alan Feldman said. An FTC
spokeswoman didn't immediately return a call seeking comment.
Much Competition
The FTC staff can't refute the companies' argument that casino hotels
on the Strip, where MGM Mirage and Mandalay together operate 10
casino-hotels, isn't a distinct market, people familiar with the case
said. That's because casinos on the Strip face competition from those
in downtown Las Vegas, the Bahamas, and some operated by American
Indian tribes in California and Connecticut, they said.
Las Vegas also faces competition from luxury casinos in Australia and
Macao.
To block a proposed merger, the government must prove that companies
seeking to combine would gain power to raise prices in a distinct
market.
MGM Mirage operates the Bellagio, the Mirage, MGM Grand, the Boardwalk
and the Treasure Island casino resorts on the Strip. Mandalay Resort
Group owns Mandalay Bay, Luxor, Excalibur, Monte Carlo and Circus
Circus. Mandalay, based in Las Vegas, also operates casinos in four
other Nevada cities, including Reno, as well as in Tunica,
Mississippi, and Elgin, Illinois.
State Approvals
The companies must also get approval from gambling regulators in
Nevada and Illinois. MGM Mirage's Feldman said the company hopes to
get a February hearing before the Nevada Gaming Commission on its
application. Mandalay operates the Grand Victoria riverboat casino in
Elgin, about 40 miles northwest of Chicago.
MGM Mirage said last month it is considering selling one of two
Michigan casinos to comply with the state's antitrust law. The
company, which originally said it would sell Mandalay's 53.5 percent
stake in the MotorCity casino in Detroit, said it was weighing offers
for its Michigan property.
MGM Mirage, based in Las Vegas, also operates casino resorts in the
Primm Valley area 25 miles south of Las Vegas near the California
border and another in Biloxi, Mississippi.
Harrah's and Caesars will sell four casinos for $1.24 billion in cash
to Colony Capital LLC as part of their attempt to win regulatory
approval for their combination. The companies said they would sell two
casinos in Tunica, Mississippi, one in Atlantic City, New Jersey, and
another in East Chicago, Indiana.
Last June, the FTC cleared Harrah's $916 million purchase of Horseshoe
Gaming Holding Co. eight months after the deal was announced. The
agency required no divestitures. The takeover gave Harrah's ownership
of Binion's Horseshoe Casino & Hotel in downtown Las Vegas, along with
casinos in Mississippi, Louisiana and Indiana.
To contact the reporter on this story:
James Rowley at [email protected]
To contact the editor responsible for this story:
Glenn Hall at [email protected]
Last Updated: January 13, 2005 13:26 EST
From: Emil Lazarian | Ararat NewsPress