MGM Mirage Bids for Mandalay as Las Vegas Surges

LAS VEGAS — MGM Mirage's $4.85 billion bid for rival Mandalay Resort Group would create the largest U.S. casino- resort company, owning about half the hotel rooms on the Las Vegas Strip. Shares of Mandalay rose as much as 21 percent.

MGM Mirage on Friday said it offered $68 a share in cash and would assume $2.8 billion in debt to buy its competitor. Mandalay said in a statement it will respond in due course without providing details.

The acquisition would give MGM Mirage a larger piece of the convention business in Las Vegas, where the number of convention visitors jumped 11 percent last year. MGM Mirage would own a total of about 36,000 rooms in 11 casino-resorts on Las Vegas Boulevard, known as "the Strip," as well as Mandalay's more than one-million square foot convention center.

"The strategic value of owning Mandalay is the convention center," said Eric Hausler, an analyst with Susquehanna Financial Group in New York. "It's the hub for the rest of their resorts. It would be a behemoth of a company."

MGM Mirage made the offer one day after Mandalay said its fiscal first-quarter profit rose 98 percent, beating analysts' estimates, for the quarter ended April 30. Mandalay's shares rose $5.65, or 10 percent, to $60.27 on Friday.

Shares of Mandalay rose to $72.50, or 20 percent, at 9:37 a.m. in New York Stock Exchange composite trading. Shares of MGM Mirage fell 73 cents, or 1.6 percent, to $45.30.

Both companies generated about three-fourths of their 2003 profit in Las Vegas. The combined company's dominance in Las Vegas may mean MGM Mirage may have trouble receiving U.S. antitrust approval, Hausler said.

The companies each own a casino in Detroit and one of them may be sold to receive regulatory approval, Deutsche Bank analyst Marc Falcone wrote in a report.

Both Las Vegas-based companies declined to comment on the offer. MGM Mirage is currently the No. 3 U.S. casino company, behind Caesars Entertainment Inc. and Harrah's Entertainment Inc.

Las Vegas hosted 38 of the largest 200 conventions in the U.S. last year, up from 27 in 1998, according to industry publication Tradeshow Week. Casino revenue has risen every month this year through March, according to the Nevada Gaming Control Board.