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MGM Mirage extends Mandalay deadline

MGM Mirage extended a Tuesday deadline on a possible merger with Mandalay Resort Group, a deal that could create the largest gambling company in the world.
/ Source: The Associated Press

MGM Mirage extended a Tuesday deadline on a possible merger with Mandalay Resort Group, a deal that could create the largest gambling company in the world.

"We need a couple of extra days to hammer out some details," a source close to the negotiations told The Associated Press. "This is progressing well."

MGM Mirage had said the offer would expire at 5 p.m. PDT on Tuesday. The new deadline for talks, which have been described as friendly, is 5 p.m. PDT Friday.

MGM Mirage's offer remains at $4.85 billion in cash and the assumption of $2.8 billion in Mandalay's debt.

MGM Mirage owns some of the most famous properties on the Las Vegas Strip, including the Bellagio, The Mirage and the MGM Grand. The Mandalay Resort Group lays claim to the "Mandalay Mile," which consists of the Mandalay Bay, Luxor and Excalibur hotels. The companies jointly own the Monte Carlo hotel-casino.

Together the two would possess about half the hotel rooms on the Strip.

News of the merger talks caused Mandalay stock to soar Monday to $70.23, up $9.96 on the New York Stock Exchange, while MGM Mirage shares dropped $1.19 to $44.84.

Mandalay's stock leveled off Tuesday in trading, dropping to $69.70, a reflection that investors might not believe MGM Mirage's offer of $68 per share will go much higher.

Marc Falcone, a Deutsche Bank gambling analyst in New York, said MGM Mirage will have to pay more to acquire Mandalay.

"We believe this transaction will happen which will maximize the value for both sets of shareholders," Falcone said in an investor's note Tuesday. "Our best guess is $72-$75."

The marriage of the two companies would establish a gambling giant with revenues of more than $6 billion annually, surpassing rivals Harrah's Entertainment and Caesars Entertainment.

The merger talks set off a flurry of speculation among gambling analysts that Harrah's could try to strengthen its own position with a potential merger.

But Harrah's chief executive Gary Loveman said Tuesday his company will not bid on Mandalay.

MGM Mirage owns or operates 12 casinos in Nevada, New Jersey, Mississippi, Michigan and Australia, and has investments in two other resorts in Nevada and New Jersey. It has a 25 percent interest in British casino developer Metro Casinos Ltd.

Mandalay Resort Group owns and operates 11 casinos in Nevada and has about 15,000 rooms on the Strip. It has ownership in other properties in Nevada, Illinois and Michigan, and owns a hotel-casino in Tunica County, Miss.