Business | Investment
Dubai World gets approval to raise MGM Mirage stake
MGM Mirage's second-biggest shareholder, Dubai World, can raise its stake in the company after New Jersey regulators gave it permission to own as much as 20 per cent of the the entertainment conglomerate.
- Bloomberg
- Published: 23:47 August 23, 2008
- Dubai World said last year that it would invest as much as $5.1 billion to buy 28.4 million shares of MGM Mirage, or about one-10th of the company.
- Image Credit: Bloomberg News
New York: MGM Mirage's second-biggest shareholder, Dubai World, can raise its stake in the company after New Jersey regulators gave it permission to own as much as 20 per cent of the the entertainment conglomerate.
MGM rose 20 per cent in New York trading on the news on Friday. The New Jersey Casino Control Commission approved the application of the Dubai government investment group yesterday, commission spokesman Daniel Heneghan said in a telephone interview. The Dubai group currently owns 9.4 per cent of MGM, according to data compiled by Bloomberg.
Dubai World can raise its MGM share to 14.75 per cent. It still needs permission from Michigan's regulators before it can make a 20 per cent investment in the Las Vegas-based company, Lawrence Klatzkin, an analyst at Jefferies & Co in New York, said in an e-mail to clients. He owns MGM shares.
Dubai World "will definitely increase their stake," Klatzkin said. "It's when, not if. The stock is cheap."
MGM has lost 58 per cent of its stock market value in the past 12 months. MGM jumped $5.52 to $33.25 at 4.15pm in New York Stock Exchange composite trading on Friday, the steepest rise since May 22, 2007.
Big investors need permission from US states for some transactions. The Michigan Gaming Control Board approved Dubai World's request for permission to own as much as 14.75 per cent in April.
Dubai World said last year that it would invest as much as $5.1 billion to buy 28.4 million shares, or about a 10th of the company, plus a 50 per cent stake in CityCentre, an MGM development in Las Vegas.
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