BUSINESS
MARCH 6, 2000 VOL. 155 NO. 9
Playing for A Wynn
Two Las Vegas legends clash over Mirage Resorts
BY JOHN GREENWALD

Forget Siegfried and Roy and their white tigers. Of all the spectacles on display in Las Vegas last week, none attracted the high rollers as much as the sudden arrival of the "Steve and Kirk Show." That's Steve as in Wynn, 58, the master builder of Vegas and chairman of Mirage Resorts, whose lavish spending on casinos like the $1.6 billion Bellagio has made Mirage about as popular as snake eyes with investors on Wall Street. The Kirk is for Kerkorian, 82, the reclusive Beverly Hills billionaire with a knack for doubling his bets and winning. The rival moguls took center stage when Kerkorian's MGM Grand bid $17 a share, or $3.4 billion, for Mirage, which only the day before had been trad- ing at $10 a share and change.

The surprise bid set up a clash of Strip titans and stunned gaming-industry observers. Steve Wynn cave to Kirk Kerkorian? No way. Besides, Nevada law frowns on unfriendly corporate takeovers--and even a Kerkorian insider admits, "Wynn has a grade-A defense." Perhaps to get around that, MGM Grand called its offer friendly, at least for now. Still, Kerkorian takes no for an answer only in exchange for a hefty profit. In 1996 he scrapped a run at Chrysler after his stock in the carmaker reportedly doubled in value to nearly $3 billion. (Kerkorian currently owns about 5% of DaimlerChrysler.)

A combined MGM-Mirage is a jackpot worth fighting for. It would become the No. 2 U.S. gambling behemoth, behind Park Place Entertainment, and would own 50% of the lucrative tables for baccarat, a card game in which players can wager as much as $250,000 at a turn. So coveted are Mirage's four Las Vegas casinos that both Park Place and Harrah's are reportedly weighing their bids for the company.

Kerkorian is clearly counting on Mirage's disillusioned shareholders, who have watched their stock slide from a 52-week high of $26 a share last May, to pressure a reluctant Wynn into making a deal. Some owners are eager to do just that. Hours after Kerkorian launched his offer, five Mirage shareholders brought class actions in Las Vegas to demand that Wynn and his board seriously consider all bids.

Analysts expect Wynn, who is gradually losing his sight to a degenerative eye disease called retinitis, to reject Kerkorian's bid as too little when the board meets this week. "There's no question that the offer isn't high enough," says a Mirage insider. "The real question is, What do we want to be when we grow up?" Translation: unless Wynn can win over Wall Street, his long-term chances of evading a predator like Kerkorian could be just a mirage.

--WITH REPORTING BY JEFFREY RESSNER/LOS ANGELES




COPYRIGHT © 2000 TIME INC.





CASINO WARS: Playing for a Wynn






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John B.
jblersch@optonline.net

JohnSr, I received word today that Mirage Resorts turned down the MGM Grand offer which amounted to $17 a share.

Do you or any other Talk Vegas member have a track record of the price per share of Mirage Resorts stock since it was founded?

It would be interesting to see a chart of the daily price per share if one was available.

What is the accepted business method of determining the market value of Mirage Resorts or other similar properties?

Is it established by the current price per share, the value of the real estate plus inventory and good will, or its income potential over a predetermined period of time?

Is there a reliable formula to determine its net worth and market value and the price at which a ready, willing, and able buyer would become seriously interested?

Anyone out there in the business to determine its value?

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will800

I have not tracked it but I purchased 500 shares 6 months ago on advice from my broker. price then was 11-5/8, 17 looks pertty good right now. But I have been advised to hang on

On the Las Vegas Advisor's web site is an unconfirmed rumor that Mirage Resorts has been sold to MGM for $21 per share. Guess we'll have to stay tuned to see if this rumor is true.

Lee Ann
Past, Present and Future Forum Moderator
leeann@talkvegas.com

If this is true, and since the Desert Inn is back on the market, maybe Steve-erino will buy it now.

V,
I know the LVA isn't the most reliable source of information, so it may not be true. <vbg> Their speculation was the same as yours however. Maybe Steve is going to start all over again with that end of the strip. Let's just hope he doesn't implode the DI to build something else.

Lee Ann
Past, Present and Future Forum Moderator
leeann@talkvegas.com

I just checked the RJ and they are also reporting the story. According to them the deal is close to being closed and an announcement could come as early as today. If it goes through it will cost MGM about 6.1 billion dollars and they will assume Mirage's 2.1 billion dollar debt. Steve and Elaine Wynn will make over 507 million dollars in the deal. I guess today should be an interesting day.

Lee Ann
Past, Present and Future Forum Moderator
leeann@talkvegas.com

LeeAnn,
This is sort of an exciting story. I know it's got my ear!
Would this be the biggest sale ever in Las Vegas casino history? If not, it's got to be close!

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Lee-PA
Moderator, What's New Forum
lee@talkvegas.com

Well gang, looks like it's a done deal. MSNBC has reported that MGM and Mirage have announced the agreement. Pending approval by shareholders and government regulatory approval, the merger is expected to take place by the fourth quarter of 2000. MSNBC reports the deal will be about 4 billion dollars plus the acquisition of 2 million dollars in Mirage debt.

Lee, if it's not the biggest sale in Las Vegas history, I would think it would be close to it.

Anyone want to start guessing what Steve is going to do with all that money? I'm with Veronica on this one. I think he has his eye on the Desert Inn. I don't think he would give up this easily without having some kind of plan in mind.

Lee Ann
Past, Present and Future Forum Moderator
leeann@talkvegas.com

[This message has been edited by Lee Ann (edited March 06, 2000).]

Lee Ann and all: Wow, this whole thing is really something.

Just think...according to PRNewswire, the acquisition of Mirage Resorts by MGM Grand will mean the MGM will own and operate the following 14 resorts: in Nevada: MGM Grand, Bellagio, Mirage, New York New York, Treasure Island, a 50% interest in Monte Carlo, Golden Nugget, Whiskey Pete's, Buffalo Bill's, and Golden Nugget, Laughlin; in Detroit: MGM Grand Detroit Casino; in Mississippi: Beau Rivage; and in Australia: MGM Grand Darwin; along with
extensive undeveloped acreage in Nevada, New Jersey, and Mississippi.

Should we buy MGM stock?

The plans for developing that new resort in Atlantic City probably fall to the bottom of the list or get cancelled?

Veronica,
I was wondering what would happen with the AC properties. I didn't read anything about them in the merger announcement. I also wondered if they put a non-competition clause in for Steve. If they did, then he wouldn't be able to buy the DI, but he might be able to continue in Atlantic City. Steve Wynn is not the type of guy to give up easily. He has to have something up his sleeve. They haven't announced any role for him in the new company, but I can't imagine him staying with the new company. He not the type of guy to not be number one. He wouldn't want to have to answer to someone in higher authority. Maybe Atlantic City is his plan. He may want to change Atlantic City the way he did Las Vegas. Whether you like him or not, I think you would have to admit that Las Vegas would probably be much different today if it wasn't for him and I think he likes that. Whether Las Vegas is better or worse for his influence is open to interpretation. Maybe he wants to come to Atlantic City and get rid of "the Donald" and now he has money to do it.

Of course this would all happen now that I was finally offered a petite suite at the Mirage after all this time. <vbg> I should have known something was up when I got that offer in the mail. [img]http://www.talkvegas.com/ubb/wink.gif[/img]

Lee Ann
Past, Present and Future Forum Moderator
leeann@talkvegas.com

About a hour ago CNN was reporting that Harrah's was preparing their own offer to purchase Mirage Resorts.

msnbc says its a done deal-- 21 bucks a share--steve wynn out.there goes my cheap t.i.room

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D.A.G.SEATTLE
furdoo3@aol.com

Oops! Was a double post.

[This message has been edited by Beth (edited March 06, 2000).]

Looks like the acreage in Mississippi, Nevada and New Jersey is also included in the deal with MGM. Lots of room for new development and growth.

Frankly, I'm not too elated over this deal as I've never been impressed with the MGM. Big is not necessarily better.

Have already heard comments about how the high rollers will be receiving fewer freebies thereby making MGM more profitable. Can you imagine what will then happen to the low and middle rollers? Lots of rumors and speculation, but it does not look too good for the average gambler.

Beth

Beth & all,
I'm not an MGM fan and while I don't care for the Wynn properties, it was still better then MGM's.
Personal feeling is, Caesars (park Place) could come out smelling like a rose out of this deal! If MGM does send some of the higher rollers packing for better care, Caesars stands to be the place.


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Lee-PA
Moderator, What's New Forum
lee@talkvegas.com

Will800,
You may find this interesting. In the annual report for Mirage Resorts for 1998, there is a chart showing the stock price for the years 1974 through 1998. In 1974, the price was .06 per share. Can you imagine? Here are the other years:
0.08 1975
0.14 1976
0.23 1977
0.55 1978
0.71 1979
1.00 1980
.89 1981
1.27 1982
2.60 1983
1.88 1984
2.33 1985
1.85 1986
2.15 1987
3.55 1988
5.48 1989
3.73 1990
5.55 1991
6.55 1992
11.94 1993
10.25 1994
17.25 1995
21.63 1996
22.75 1997
14.94 1998

Kizzy,
Sounds like you bought your shares at a good price. I've got just a few shares, however, I paid about $20 at the time. Went up to $28 at one point and then back down to whatever it is now. Would have been nice to have bought some of this in the 70's, wouldn't it?

Gregg-- plus a couple of stocks splits along the way--i think the all time high was either 56 or 66 bucks a share some two years ago

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D.A.G.SEATTLE
furdoo3@aol.com

Kizzy--mirrage stock closed today at 181/8--i thought the deal was for 21 bucks a share--isnt that 15% profit sitting on the table or am i missing something?

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D.A.G.SEATTLE
furdoo3@aol.com

Talked to broker today he said to hold on. I am sure no expert so I am riding on his advice