MGM Cuts Ties With Borgata
(MGM Mirage article updated with additional analyst commentary on MGM's sale.)
NEW YORK (
) --
MGM Mirage
(MGM) - Get Report
-- it is now official -- will sell its 50% stake in Borgata after reaching a settlement with new Jersey.
Under the settlement, MGM's stake will be put into a trust and sold within the next 30 months. It will also sell 40 acres of undeveloped land. This will leave MGM with 90 acres of land that it will also consider selling.
|
During the first 18 months, MGM, which co-owns the Borgata with
Boyd Gaming
(BYD) - Get Report
, will have the right to choose a buyer, subject to state approval. If it hasn't sold by then, the trustee will be responsible for the sale.
The casino operator would rather cut ties with Atlantic City than with its partner in Macau, Pansy Ho, who New Jersey regulators claim is an unsuitable business partner due to accusations that her company is linked to organized crime.
MGM is currently in the process of completing an initial public offering of its Macau assets, which would only strengthen its relationship with the Ho family.
But who would be willing to purchase MGM's stake? "It's a great property, but a lowsy market," KeyBanc analyst Dennis Forst says.
Forst doubts any public company will swoop in. He says its more likely to be snatched up by an international buyer like
Genting
, or private-equity firm.
While there is also the possiblity that Boyd Gaming will take the other half, it is unlikely unless it's at a good price, Forst says.
-- Reported by Jeanine Poggi in New York.
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