Wednesday, April 13, 2011

MGM Resorts (MGM) Takes Controlling Interest in Macau Business

MGM Resorts International (NYSE:MGM) will take control of its joint venture MGM China Holdings, as partner Pansy Ho will sell 1 percent to the company while sell up to 23 percent in an IPO. The 1 percent will give MGM Resorts International a 51 percent stake in the joint venture, subject to regulatory approval.

Ho, the daughter of Chinese casino mogul Stanley Ho, will be left with a 29 percent stake in the venture.

Wells Fargo analyst Carlo Santarelli said about the deal, "Most importantly...we believe investors will be pleased with the new structure, given MGM has increased, rather than diluted, its ownership of the fastest growing asset in its portfolio. The ability to consolidate the MGM China results could potentially unlock some equity value given the pro forma improvement in total leverage ratios of the company."

But in the short term, Santarelli said MGM will probably be leaving some proceeds on the table.

MGM Resorts International was trading at $13.16, gaining $0.55, or 4.36 percent, as of 9:50 AM EDT.

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