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Tracinda Bid for More MGM Shares Sends Casino Stocks Soaring
Tracinda Corporation, the investment firm owned by billionaire Kirk Kerkorian, announced on November 22, 2006 that they are planning to increase their stakes in MGM Mirage Inc. to as high as 61.7%.
Tracinda Corporation already has a 56.3% ownership of MGM Mirage, based in Las Vegas, and said they intend to buy 15 million additional shares of the company for $55 each.
The ripples in the casino industry were felt quickly as shares rose for Boyd Gaming Corporation, Station casinos Inc. and Wynn Resorts Ltd.
David Katz, CIBC World Markets analyst, stated in a research note "The offer implies that the company is presently undervalued by the public markets," in regards to Tracinda's plan to purchase the shares at a 12% premium on their current market value.
"If the deal is fully tendered, we think it could be a sign that investors also have some concerns about MGM's development project," said Steven Kent, Goldman Sachs analyst. "However, if the stock holds in at these $53-$54 levels and if significantly less than 100% of the float is tendered, it signals that investors are willing to forgo short-term economic profit with the belief that the shares are fundamentally undervalued in the long term."
Wednesday, December 06 , 2006
Edward O'Connor