MGM Takes Sale Off the Table

MGM Mirage will provide the land, which is being valued at $20 million per acre. Kerzner, which owns the Atlantis Paradise Island resort in the Bahamas, will contribute cash equity, so that each party owns 50% of the project.

TheStreet.com reported in April that MGM was eying the creation of such joint ventures to extract value for shareholders in light of surging real estate prices in Las Vegas.

"We see this type of relationship as a major part of our company's future," said Terry Lanni, chairman and CEO of MGM, in a statement. "Our considerable real estate holdings, combined with our experience and efficiencies in developing major entertainment resort properties, are unmatched.

"We believe this joint venture could well serve as a model for similar transactions which we think could further enhance shareholder value by accelerating growth and conserving our capital, allowing us to pursue other growth opportunities and/or return excess capital to our shareholders," he added.

The company's signal that it could pursue other similar deals helped to mollify Kerkorian. His firm, Tracinda Corp., said Wednesday that the Kerzner deal "demonstrates that there is significant potential to unlock value for [MGM's] shareholders through a variety of strategic transactions involving the company's assets."

Tracinda said it will continue to monitor its investment in MGM and evaluate opportunities to enhance shareholder value.