Updated from 2:50 p.m. EST
offer to buy the Mirage
casino chain has touched off speculation about rival resort-industry bidders, but analysts and investors alike have been reluctant to bet on a Mirage sale.
None of the other three companies large enough to contemplate a purchase of
Stephen A. Wynn's casino empire would confirm speculation that they were crunching the numbers of an acquisition.
"We are interested in any strategic acquisitions that would add value for our shareholders," said Gary Thompson, spokesman for Harrah's Entertainment
. But he would not talk specifically about Mirage.
Park Place Entertainment
and Trump Hotels and Casino Resorts
did not return calls for comment.
"A lot of it is just chatter," said Daniel Davila, analyst for Southcoast Capital. "I may be overly cynical, but I think most of these rumors are emanating from investment banks all over the country. I can assure you it's not coming from inside Clark County," where Las Vegas is located. Davila rates both Mirage and MGM strong buys, and his firm has not done underwriting for either company.
Shares of Mirage have climbed from 10 7/8, where they closed Tuesday before the friendly MGM Grand offer, to close at 15 1/16 Friday, up 7/8, or 6%, for the day. They remain below the $17-a-share offer.
Shares of MGM Grand fell 2 1/4, or 5%, to close at 39 3/16 on moderate volume Friday.
There appeared to be little, if any, speculative action in the stocks and options of the potential rival bidders. Harrah's closed up 5/16, or 1.6%, at 20 1/4 Friday. Park Place gained 1 3/8, or 12.8%, to 12 1/8. But Trump lost 1/8, or 3.9%, to 3 1/8.
Analysts have almost uniformly said Wynn's independent nature will be a major impediment to the proposed MGM Grand deal, but the other gaming companies' prospects look bleaker still.
"In our view, only Harrah's Entertainment is possibly in a position to offer more than MGM's $17-per-share bid," Harry C. Curtis, a Robertson Stephens analyst, wrote in a report Friday. Harrah's could pay up to $19 a share without diluting its earnings, he wrote, but the price would assume $150 million in cost savings and $350 million in asset sales.
But even that bit of math assumes a friendly transaction, as MGM Grand has proposed. Nevada laws requires an outsider to get the approval of a gaming company's board before buying 10% or more of the company's stock, and Wynn has an especially cozy relationship with his board. So only a friendly transaction seems feasible to analysts.
If Wynn finds the MGM Grand deal unacceptable, rival bids also face obstacles. For example, Harrah's array of resorts scattered around the globe appeal to a different clientele than MGM Grand and Mirage, which focus primarily on offering high-rolling gamblers the most opulent of times.