Updated from 7:50 a.m. EDT

The $7.9 billion cash-and-debt deal between MGM Mirage ( MGG) and Mandalay Resorts Group ( MBG) is so large that its impact can even be seen from Las Vegas' street corners, where the combined company dominates the world's largest gambling market.

As expected, the merger of MGM, the third-largest U.S. gaming company, and Mandalay, the fourth-largest, was unanimously approved by the boards of both companies. Under the terms of the deal, MGM bought Mandalay for $4.8 billion in cash, or $71 a share, up from an earlier offer of $68 a share, with the assumption of $2.5 million in debt and $600 million in convertible debentures. MGM said it expects the transaction to be completed by the end of the first quarter of 2005.

"This acquisition will create the world's leading gaming and leisure company with an unmatched portfolio of resorts," said Terry Lanni, chairman and CEO of MGM. "Mandalay is an outstanding franchise with top-notch properties that complement MGM Mirage's existing footprint as well as brands that are recognized and respected worldwide."

Barring any asset sales and pending regulatory approval, MGM and Mandalay have a combined 28 properties -- 10 of which can be found on the Las Vegas Strip, giving it near-complete control over a three-mile stretch of gaming, concentrated mainly on the west side. Eight of the 10 casinos between Treasure Island and the Mandalay Bay casino belong to MGM. Caesars Entertainment's ( CZR) flagship casino, situated between the Mirage and Bellagio, remains the lone oasis of non-MGM gaming on one side of the street.

"We are clearly bullish on Las Vegas and its potential," said Jim Murren, CFO of Mirage, "and believe the combination will better position us to meet the needs of a broad range of customers in an increasingly competitive regional and national gaming marketplace."

According to research from UBS, MGM now controls 48% of the gaming positions, 46% of the square footage and 49% of the hotel rooms on the Las Vegas Strip. But, depending on how the deal is financed, the acquisition could come at the expense of shareholders and future earnings potential. MGM hasn't revealed details about the deal, but said on a conference call that the full merger agreement would be released next week.

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