MGM Mirage(NYSE:MGM) is recently up $1.78 to $87.38. Dubai World, a holding company for the Persian Gulf state, announced on 8/22/07 it will pay $2.7 billion to acquire a stake in MGM City Center, a 76-acre Las Vegas development. Dubai World will also buy 14 million shares from MGM for $84 a share and 14 million from investors. Unconfirmed chatter is circulating Dubai World will raise its tender bid.
Penn National Gaming(NYSEPENN), a diversified, multi-jurisdictional owner and operator of gaming properties, agreed to be acquired on 6/15/07 by certain funds managed by affiliates of Fortress Investment(NYSE:FIG) and Centerbridge Partners for $67 dollars a share. The deal is expected to close in mid-2008. PENN is recently trading at $58.26.
Daily M&A Update is provided by Stock Specialist Paul Foster of theflyonthewall.com
MGM Mirage(NYSE:MGM) volatility Elevated on unconfirmed chatter of Kerkorian's interest in all of MGM. MGM is recently up $3.43 to $77.92 on unconfirmed chatter controlling Kirk Kerkorian will make a bid for the entire company. MGM has a market cap of $21.6 billion. Kerkorian's Tracinda announced its intention on 5/22/07 to enter negotiations with MGM to acquire Bellagio and City Center from MGM. MGM call option volume of 5,913 contracts compares to put volume of 785 contracts. MGM August & September option implied volatility of 45 is above its 26-week average of 35 according to Track Data, suggesting larger risk. Wynn Resorts (NASDAQ:WYNN) is recently up $11.46 to $118.85 after reporting better than expected EPS of .92 cents. Las Vegas Sands (NYSE:LVS) is $20 over the last week after reporting strong EPS on 8/1/07.
Archstone-Smith Trust(NYSE:ASN) volatility up into ASN pushing deal out to 10/5. ASN announced Tishman Speyer and Lehman (NYSE:LEH) $60.75 cash purchase of ASN will close on October 5th, versus previously in early September. ASN is recently at $56.66. ASN owned or had an ownership position in 344 communities, representing 86,014 units as of 3/31/07. SBSH say's "ASN announcement that it granted Tishman & LEH more time to close the transaction is a slippery slope which we believe may lead to the deal being re-priced or the $1.5 billion break up fee being paid." ASN over option implied volatility of 16 is above its 10-week average of 13 according to Track Data, suggesting larger risk.
Daily M&A Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.
Many thought that Kerkorian's intention was to nudge MGM Mirage (NYSE :MGM) onto the sale block, to see what his 56% of the remaining company assets might fetch in a buyout-friendly climate. The latest deal, with its implications for increased debt and holdings value, apparently caused him to rethink this move, at least for the moment.
MGM Mirage already has a huge footprint in Las Vegas, but remains very aggressive (i.e. carrying a considerable debt load) in pursuing further growth. Its new $725 million Detroit casino is scheduled to open late this year. The CityCenter complex in Las Vegas has tied up $7.4 billion and won't be ready until 2009, and MGM has put another $1 billion into a cooperative venture, MGM Grand Macau, opening later this year. It is also in talks about another huge development on the Cotai strip in Macau.
Those punters who jumped on the bandwagon at the initial announcement of Kerkorian's interest in Bellagio are jumping back off this morning. MGM Mirage stock was down more than 10% in early trading.
Defining periods of irrational exuberance can be difficult. However, one method to do so might simply be to look at the headlines. Here are this morning's:
Crescent Real Estate Equities to be purchased by Morgan Stanley (NYSE: MS) Real Estate
The headlines are not too different from the 1980s LBO boom when virtually every headline was associated with a hostile buyout of some sort. Are we approaching the end of the buyout binge? Most likely not. These periods can last for years.
This buyout boom has been fueled by a number of factors. The most important factor has been undervalued stocks, which, in many cases, still remains. In the post tech-telecom bubble of the 1990s, investors went into a cocoon while U.S. company management continued to grow earnings and increase returns on investment.
What will end this buyout boom? My bet is a massive bull market which pushes valuations off the radar screen of private equity.
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MGM Mirage(NYSE:MGM) is recently up $1.78 to $87.38. Dubai World, a holding company for the Persian Gulf state, announced on 8/22/07 it will pay $2.7 billion to acquire a stake in MGM City Center, a 76-acre Las Vegas development. Dubai World will also buy 14 million shares from MGM for $84 a share and 14 million from investors. Unconfirmed chatter is circulating Dubai World will raise its tender bid. 
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