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Friday, September 17, 1999
Copyright © Las Vegas Review-Journal
Kerkorian acquires Mirage shares
Analysts say the Las Vegas billionaire probably isn't preparing a takeover bid for the casino company.
By Bob Macy
Associated Press
MGM Grand Co. Chairman Kirk Kerkorian has purchased 4.9 percent of the stock in Mirage Resorts Inc., prompting speculation among gaming analysts as to the next move for the two casino giants.
Analysts speculated the move could lead to a takeover effort by Kerkorian if Mirage stock remains undervalued.
But one of Kerkorian's top executives said the purchase was "for investment purposes only."
Jason Ader of Bear, Stearns & Co. said he doesn't think Kerkorian's recent purchase -- some 9.8 million of Mirage's 200 million shares -- is a prelude to any takeover effort, as long as the stock rebounds from its current range of $14 a share.
Kerkorian, whose MGM Grand owns the MGM Grand resort on the Strip, has been accumulating the Mirage stock over the past few weeks, Ader said.
Joseph Coccimiglio of Prudential Securities said he thought MGM "could buy Mirage for up to $20 (a share) and it could be a good one for MGM."
"While it could happen, I don't think it's very likely," Coccimiglio said. "It's highly unlikely it would be friendly. It would likely be unfriendly and hostile actions haven't worked in the gaming industry. I don't think regulators look at them very friendly."
Alex Yemenidjian, president of MGM Grand and chairman and chief executive officer of Kerkorian's Metro-Goldwyn-Mayer Inc. in Santa Monica, Calif., told The Associated Press Thursday the stock purchase "was made for investment purposes only."
Mirage stock had been trading at $12 to $13 a share earlier this week, down from a late spring high of $26 a share.
MGM Grand stock has been trading in the $49 range, up 83 percent for the year.
"I think Kirk, who is one of the best investors, period, sees that the value of the (Mirage) assets is worth far more than the current stock price," Ader said.
Asked if the stock purchase might be a forerunner to a hostile takeover bid by Kerkorian, similar to his efforts to take control of automaker Chrysler Corp., Ader responded:
"I think right now Kirk is going to take a passive role. But if stock prices languish, Kirk has a history of becoming hostile. I think for now Kirk's interests are not as aggressive as he has been historically.
"If (Mirage) stock prices continue to languish, one should not rule out the possibility of him trying to seek control of the company," Ader added.
Ader said Kerkorian had called Mirage Chairman Steve Wynn to inform him of the purchase.
The two were described as friends.
"I don't know what to make out of the Kerkorian purchase," Coccimiglio said. "He obviously has a history of doing takeovers. So I wouldn't take it very lightly."
Ader said he thinks Mirage may be turning around after encountering problems in Las Vegas and Mississippi. He said Bear Stearns was upgrading Mirage stock from neutral to attractive following "recent positive news" from the company.
Alan Feldman, a spokesman for Mirage Resorts, said the company has "no idea who's buying our stock unless they buy enough that they have to file with the Securities and Exchange Commission, and we wouldn't know that for a few days."
Anyone buying more than 5 percent of a public company must file notice with the SEC.
Kerkorian has been a major player in Las Vegas for more than a quarter of a century. He has built the world's largest hotel here three times. He built the International, now the Las Vegas Hilton, and later built the old MGM Grand, now Bally's-Las Vegas. In 1993 he opened the new 5,005-room MGM Grand Hotel on the Las Vegas Strip.
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