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Mandalay, MGM Boards OK Takeover

June 16, 2004|From Associated Press

The board of Mandalay Resort Group late Tuesday approved MGM Mirage's $4.8-billion cash offer to buy the gambling company in a deal that would create the industry's dominant casino operator.

"Our board has approved the offer from MGM Mirage to purchase the company at $71 per share," Glenn Schaeffer, Mandalay's president and chief financial officer, told Associated Press.

MGM Mirage's board approved the proposal earlier Tuesday after its directors also held a lengthy debate amid questions of whether antitrust regulators would approve the biggest casino deal in history.

The deal includes the assumption of $2.5 billion in Mandalay debt and $600 million in bonds that can be exchanged for stock in the company. Schaeffer said the agreement also called for a $160-million breakup fee if the transaction did not close.

The cash price represents a 30% premium to Mandalay's closing share price June 3, a day before MGM Mirage's initial offer of $68 a share was disclosed.

Mandalay's board signed off on the deal after a seven-hour meeting, Schaeffer said.

The combined holdings of the two Las Vegas-based companies would include 36,500 rooms, 22,000 slot machines and 1,050 gaming tables at the Bellagio, MGM Grand, Mandalay Bay Resort, Excalibur and seven other hotels on the Las Vegas Strip.

Shares of Mandalay edged up 28 cents to $67.88 and MGM Mirage rose $1.30 to $49.50 on the New York Stock Exchange in anticipation of a deal.

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