MGM MIRAGE and Dubai World to Form Long-Term Strategic Relationship
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MGM MIRAGE and Dubai World to Form Long-Term Strategic Relationship
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Category: Middle East
This is a press release selected by our editorial committee and published online for free on 2007-08-24
Dubai World to invest $2.7 billion for a 50 percent interest in
CityCenter in Las Vegas and will make a significant equity investment in
MGM MIRAGE
MGM MIRAGE (NYSE: MGM) and
Dubai World today announced that they have signed definitive agreements to
form a long-term strategic relationship whereby Dubai World will invest
approximately $5 billion in MGM MIRAGE consisting of a $2.7 billion
investment in CityCenter and up to $2.4 billion in purchases of MGM MIRAGE
common stock. The companies will enter into a 50/50 joint venture in the
landmark CityCenter development in Las Vegas and Dubai World will acquire a
significant minority equity position in MGM MIRAGE.
The joint venture, CityCenter Holdings LLC, will be owned equally by
MGM MIRAGE and Infinity World Development Corp., a wholly-owned subsidiary
of Dubai World. Upon closing, CityCenter Holdings LLC will own 100 percent
of CityCenter, a mixed-use luxury residential, resort and retail complex
currently being developed by MGM MIRAGE on the Las Vegas Strip.
In addition to investing in the joint venture, Dubai World through
Infinity World Investments, will purchase up to 28.4 million shares of MGM
MIRAGE representing approximately a 9.5 percent equity stake. Dubai World
will seek to accomplish this through a combination of a public tender offer
for 14.2 million shares of the outstanding stock at a price of $84 per
share, which represents an approximate 13% premium over yesterday's closing
price, and an agreement to subsequently purchase an additional 14.2 million
shares directly from the Company at the same price, for a combined
investment of approximately $2.4 billion.
The companies anticipate that the joint venture investment will close
by the end of the year, and that the tender offer will commence during the
week of August 27, 2007. The parties anticipate that the purchase of shares
from MGM MIRAGE will close concurrently with or soon after the closing of
the tender offer subject to requisite approvals.
In connection with the joint venture, Dubai World will initially
contribute approximately $2.7 billion for 50 percent of the equity in
CityCenter. MGM MIRAGE will contribute the CityCenter assets which the
parties have mutually valued at $5.4 billion, and receive 50 percent of the
equity in CityCenter. Following the close of the joint venture transaction,
MGM MIRAGE will receive a cash distribution of $2.7 billion. By completing
CityCenter on budget and on schedule, MGM MIRAGE will receive additional
consideration of $100 million. The joint venture will obtain project
specific financing to fund remaining project costs.
MGM MIRAGE will continue to serve as developer of CityCenter and upon
completion, the joint venture will pay MGM MIRAGE a management fee to
operate CityCenter's resort casino as well as the development's retail
activities and the Vdara condo-hotel tower.
"This is a transforming event for MGM MIRAGE and Las Vegas," said Terry
Lanni, Chairman and CEO of MGM MIRAGE. "This partnership with Dubai World
brings us a relationship with an internationally-respected developer of
large- scale luxury properties that attract an international clientele.
Dubai World's proficiency in real estate, combined with our company's
operational expertise, strong brands and world-renowned resorts, creates
competitive advantages that we believe will benefit all of our
stakeholders. We are extremely pleased to be working with Dubai World. We
have a tremendous amount of respect for Sultan Bin Sulayem and all that his
company has accomplished.
"This transaction is immediately accretive to long term earnings and
will have a profound impact on our balance sheet. Dubai World is making a
significant investment in our company that will greatly increase our growth
and earnings. We welcome Dubai World's long term commitment to our company
through the joint venture and these share purchases," Mr. Lanni continued.
Sultan Bin Sulayem, Chairman of Dubai World said, "The announcement
today brings together two companies known for creating landmark
developments that have the ability to change the face of luxury living and
destination tourism. In seeking international expansion, we chose a partner
who would complement our strengths in large-scale development as well as
share our view of investing for the long-term. We were attracted by MGM
MIRAGE's superior assets, locations, and brands. Terry Lanni and his
management team have a proven ability to create extraordinary customer
experiences that generate demand and earn customer loyalty.
"Our vision is to create a global portfolio of signature properties
that will create value for generations to come. The unprecedented
CityCenter will redefine the luxury lifestyle and incorporate world-class
elements of fine art and design, fulfilling our goal of creating landmark
developments while further expanding into the important U.S. real estate
market. We look forward to making this project an international success and
sharing in other opportunities for expansion with MGM MIRAGE," continued
Sultan Bin Sulayem.
Targeted for completion in late 2009, CityCenter is a luxury urban
metropolis defined by its dazzling vertical architecture rising from the
Las Vegas Strip. CityCenter's design team includes many of the world's
foremost architects such as Daniel Liebeskind, Lord Norman Foster, and
Rafael Vinoly. The self-contained city-within-a-city will include:
* A dramatic Cesar Pelli-designed 4,000-room resort casino;
* Approximately 470,000 square-feet of retail and entertainment space;
* 2,650 luxury condominiums and condo-hotel units in multiple towers;
and
* Two 400-room non-gaming boutique hotels, one of which will be managed
by luxury hotelier Mandarin Oriental.
Credit Suisse Securities acted as financial advisors to Dubai World.
UBS Investment Bank served as financial advisors to MGM MIRAGE. Paul,
Hastings, Janofsky & Walker LLP acted as legal counsel to Dubai World and
Christensen, Glaser, Fink, Jacobs, Weil & Shapiro, LLP acted as legal
counsel to MGM MIRAGE.
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