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Kerkorian ends talks on MGM properties

/ Source: The Associated Press

The investment arm of billionaire Kirk Kerkorian said Wednesday it was ending negotiations on the possible purchase of casino giant MGM Mirage’s Bellagio hotel-casino and its CityCenter project.

Tracinda Corp., which owns 56 percent of MGM Mirage shares, last month proposed buying the Las Vegas Strip properties. Tracinda also said in a filing with the Securities and Exchange Commission that it wanted to pursue “strategic alternatives” related to its majority stake in MGM Mirage.

The May 21 announcement sent shares of MGM Mirage skyrocketing 27 percent before they retreated. Shares of MGM Mirage fell following Wednesday’s announcement.

Tracinda said it still saw “substantial unrecognized value in the assets of MGM Mirage.” It pointed to newly announced joint venture plans between MGM Mirage and Kerzner International Holdings Inc., saying MGM Mirage’s approach to joint ventures shows that it can unlock value for shareholders through various transactions.

MGM Mirage said in a statement that it was dissolving a committee formed to consider any Tracinda proposals.

“We are very gratified by the overwhelming interest in our company that followed Tracinda’s initial announcement,” MGM Mirage Chief Executive Terry Lanni said.

MGM Mirage and Kerzner said Wednesday they planned to form a joint venture to develop a multibillion dollar Las Vegas resort.

The deal calls for MGM Mirage to supply about 40 acres of land for the resort, valued at $20 million per acre. Kerzner and one of its financial partners will provide cash equity for the complex.

Kerzner will be responsible for project planning and design, which is expected to take a year. Construction is predicted to take three years.

The project will be financed through equity contributions and third-party debt financing.

The resort is unnamed, but may use existing brands owned by either MGM Mirage or Kerzner or possibly a new brand.

The companies said they hoped to have a definitive agreement in the third quarter.