FTC approves blockbuster Vegas merger

/ Source: The Associated Press

The Federal Trade Commission on Wednesday approved MGM Mirage’s proposal to buy rival Mandalay Resort Group, a move that could create one of the largest gambling companies in the world and give the casino operator control of 11 resorts on the famed Las Vegas Strip.

The commission voted 5-0 to close its investigation and place no conditions on the transaction, an FTC spokesman told The Associated Press.

MGM Mirage Inc. still needs Nevada and other state gambling regulators to approve the blockbuster deal.

“We are very pleased that the FTC has made the ruling but there remains a significant step, the approval of the Gaming Control Board and Gaming Commission in Nevada,” MGM Mirage spokesman Alan Feldman said.

Nevada gambling regulators are scheduled to consider the matter next week.

“We are prepared to make a full presentation to the board and commission and we’re confident that we will be able to move forward and close this transaction by March,” Feldman added.

In June, MGM Mirage agreed to purchase Mandalay for $4.8 billion in cash, $2.5 billion in debt and $600 million convertible debentures. The company has secured financing for the merger.

Combining the Las Vegas-based companies will give MGM Mirage revenues of about $6.5 billion and control of 28 properties in Nevada, Illinois, New Jersey, Michigan and Mississippi.

The companies would claim half of the 74,424 hotel rooms and about 40 percent of the slot machines on the Strip. Those numbers will slide slightly when Wynn Resorts Ltd.’s 2,700-room Wynn Las Vegas and the 949-room tower at Caesars Palace open later this year.

In addition to 70,000 employees, MGM Mirage would have the fifth largest convention center in the United States, at the Mandalay Bay hotel-casino in Las Vegas.

Many of the world’s most famous casinos, The Mirage, Bellagio, MGM Grand, Circus Circus, Luxor and Mandalay Bay would fall under the new MGM Mirage corporate umbrella.

MGM Mirage also will own more than 150 acres of undeveloped land on the Strip, some of the most valuable real estate in the world. The company intends to build a 4,000-room megaresort and sprawling urban development in the heart of the Las Vegas Strip, a $4 billion project that would alter the landscape of the city’s most important commercial center.

MGM Mirage officials call the ambitious plan “Project CityCenter,” and believe it will help transform Las Vegas into a sophisticated, multidimensional city that rivals other major metropolitan areas.

In 2007, it expects to open a hotel-casino in the Chinese enclave of Macau, and plans to open properties in the United Kingdom once gambling laws are loosened there.

MGM Mirage must sell one of two Detroit casinos. It already owns the MGM Grand, and Mandalay owns a majority stake in MotorCity Casino. Michigan law requires the city’s casinos be owned separately.

Caesars Entertainment Inc. and Harrah’s Entertainment Inc. are waiting for the FTC to sign off on their proposed merger, which would create the biggest gambling company in the world in terms of revenues.

Harry Curtis, a gambling analyst with JP Morgan, wrote in an investor’s note Wednesday that the deal should bolster the company’s financial prospects.

“We believe that closing of the transaction will be positive for MGG’s stock because MGG can move quickly to drive revenue per occupied room higher while reducing duplicate overhead and marketing costs.”

MGM Mirage shares closed down 34 cents, to $77.80 on the New York Stock Exchange. Mandalay Resort Group shares shed a penny to close at $70.62.