MGM Mirage committee hires two advisers

The MGM Mirage board of directors committee exploring a potential buyout of two of the company's large holdings by majority stockholder Kirk Kerkorian hired UBS Investment Bank as its financial adviser, and Weil, Gotshal & Manges LLP, as legal adviser.

The entities will help the board look at any potential offer from Kerkorian, the 89-year-old billionaire, who said in a filing the U.S. Securities and Exchange Commission this week he wanted to acquire both Bellagio and the $7.4 billion CityCenter mixed-use project.

Sources at MGM Mirage said the committee would comprise Roland Hernandez, the former chairman of Spanish language-television giant Telemundo; Rose McKinney-James, a Las Vegas-based energy consultant and lobbyist, and former Gov. Kenny Guinn, who was named to the board of directors on Tuesday.

Kerkorian, a member of the MGM Mirage board of directors, owns 56 percent of the casino operator. No details, structure of the proposed transaction, or time frames were given.

Most analysts believe the deal could involve Kerkorian swapping all or some of his shares in MGM Mirage for the assets. Observers believe MGM Mirage, if it were to sell the holdings to Kerkorian, would still manage the ventures for the investor.

The announcement sent the price of MGM Mirage stock soaring above $80 a share. On Friday, shares of the company closed at $76.76 on the New York Stock Exchange, unchanged from Thursday.

Meanwhile, Deutsche Bank gaming analyst Bill Lerner believes it will be summer before anything happens with the offer.

"We wouldn't anticipate hearing anything from MGM Mirage's special committee or its board for about three months," Lerner said in a note to investors Friday.

Lerner thought other gaming companies, such as Penn National, Pinnacle Entertainment and Ameristar Casinos, might be interested in acquiring parts of MGM Mirage.

"By being sufficiently vague in his announcement, Kerkorian is igniting a confluence of demand for MGM Mirage's assets," Lerner said.

MGM acquired Bellagio in 2000 when took over developer Steve Wynn's Mirage Resorts for $6.5 billion. The Italian-themed casino was built for $1.6 billion, then a record for Las Vegas, and opened in 1998. The property is the city's most lucrative, with earnings before interest, taxes, depreciation and amortization of $478 million in 2006, Jefferies & Co. analyst Larry Klatzkin said.

CityCenter is under construction and expected to be complete in 2009.

Bloomberg News contributed to this report.