New Jersey gaming regulators gave MGM Mirage’s second-biggest shareholder permission to acquire as much as 20 percent of the Strip’s largest casino operator, which sent the company’s stock price soaring Friday.
Dubai World, the investment arm of the Persian Gulf state, now owns 9.4 percent of MGM Mirage, which operates 10 casinos on Strip, as well as casinos in Northern Nevada, Detroit and Mississippi. Los Angeles billionaire Kirk Kerkorian holds the majority stake in the casino operator, almost 54 percent.
The New Jersey Casino Control Commission approved the application of the Dubai government investment group Thursday, commission spokesman Daniel Heneghan told Bloomberg News.
The news gave the stock price of MGM Mirage its largest single-day price bump since May 22, 2007. Shares of the company rose $5.52, or 19.91 percent, to close at $33.25 on the New York Stock Exchange.
Dubai World bought its initial stake in MGM Mirage last year and increased its ownership in February. The investment group paid $80 a share, roughly $2 billion. Also, Dubai World invested nearly $3 billion to acquire 50 percent ownership of CityCenter, the massive $9.2 billion Strip development project.
Nevada gaming regulators don’t require prior approval, but an investor must file a licensing application with the state once the 10 percent threshold is crossed. Dubai World applied for a gaming license with Nevada last year because of the investment arm’s 50 percent ownership of CityCenter.
MGM Mirage Chief Financial Officer Dan D’Arrigo said it has been Dubai World’s intention from the initial agreement to acquire 20 percent of the company, although no timetable has ever been set.
“It’s clearly up to them when and how they want to acquire the additional shares,” D’Arrigo said Friday.
In April, Michigan gaming regulators gave Dubai World permission to raise its stake in MGM Mirage to 14.75 percent and will need to grant an additional approval.
Jefferies and Co. gaming analyst Larry Klatzkin told investors Dubai World will raise its stake.
“It’s when, not if,” Klatzkin said. “The stock is cheap.”
MGM Mirage has lost 58 percent of its stock market value in the past 12 months.
Representatives of Dubai World testified at the New Jersey commission’s hearings Thursday. Dubai World Chairman Sultan Ahmed bin Sulayem said a year ago that Dubai has an option to increase its stake to as much as 20 percent.