Offer from MGM Mirage; Will Be World's Largest
Gambling Company and Dominate
Las Vegas Market
|LAS VEGAS, June 16, 2004 - MGM MIRAGE (NYSE: MGG) and Mandalay Resort
Group (NYSE: MBG) today jointly announced that they have entered into a
definitive merger agreement under which MGM MIRAGE will acquire Mandalay
for $71.00 per share in cash, a premium of approximately 30% to Mandalay's
closing share price on the day before MGM MIRAGE made its initial offer.
The total value of the acquisition is approximately $7.9 billion, including
equity value of approximately $4.8 billion, $600 million of convertible
debentures and the assumption of approximately $2.5 billion in outstanding
The combination will bring together two leading gaming resort operators to form a highly diversified hospitality company appealing to a broad spectrum of the leisure and business travel and event markets.
Following the acquisition, MGM MIRAGE will own and operate 28 properties throughout Nevada, Mississippi, Illinois, Michigan and New Jersey. The combined company will have an asset portfolio that includes Bellagio, MGM Grand Las Vegas, The Mirage, Mandalay Bay and Circus Circus. These properties cater to a broad customer base, ranging from value-oriented to ultra high-end and chic, and each provides a unique customer experience. Following completion of the transaction, MGM MIRAGE will also own the fifth largest convention center in the U.S., providing the opportunity to further develop Las Vegas as a significant convention alternative for consumers.
Terry Lanni, Chairman and Chief Executive Officer of MGM MIRAGE, said, "This acquisition will create the world's leading gaming and leisure company with an unmatched portfolio of resorts. 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. The company also has an extremely talented and motivated group of employees, and we are excited to have them join our team. As our industry becomes increasingly competitive, and our company evolves into a multi-faceted entertainment, business and hospitality franchise, this transaction will allow us to serve the ever-growing needs of our customers with outstanding gaming, lodging, dining, entertainment and convention assets."
"Today's announcement is the culmination of the hard work and dedication of our management team, who built Mandalay Resort Group into a premier company in destination entertainment," said Mike Ensign, Mandalay's Chairman and Chief Executive Officer. "We believe this outstanding combination delivers the full value of our franchise to our shareholders and creates growth opportunities for Mandalay employees. We will devote ourselves to a rapid and smooth integration of the two companies. The new company will prove an influential factor in the future of American entertainment."
Jim Murren, President, Chief Financial Officer and Treasurer of MGM MIRAGE said, "This combination will create a well-capitalized company that will generate significant free cash flow enabling it to further invest in our current portfolio of resorts as well as in new domestic and international growth opportunities. We strongly believe the opportunities arising from this acquisition can create a meaningful increase in long-term value for MGM MIRAGE shareholders. We are clearly bullish on Las Vegas and its potential, 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."
MGM MIRAGE expects the acquisition to be immediately accretive to earnings per share before synergies and that it will increase free cash flow. Pro forma 2003 revenues for the combined company are $6.5 billion, and MGM MIRAGE will be represented by more than 70,000 employees throughout the world.
Under the terms of the transaction, Mandalay will terminate its quarterly dividend, but the $0.27 per share dividend declared on June 2, 2004, will be paid on August 2, 2004, as previously announced.
The transaction is subject to the approval of Mandalay shareholders and to the satisfaction of customary closing conditions contained in the merger agreement, including the receipt of all necessary regulatory and governmental approvals. MGM MIRAGE anticipates the transaction will be completed by the first quarter of 2005.
Bank of America Corporation, Citigroup Inc., Deutsche Bank AG, JPMorgan Chase & Co. and Societe Generale Group acted as financial advisors and Morgan Stanley provided a fairness opinion to MGM MIRAGE. Christensen, Miller, Fink, Jacobs, Glaser, Weil & Shapiro, LLP and Fried, Frank, Harris, Shriver & Jacobson LLP served as legal counsel to MGM MIRAGE. Merrill Lynch & Co., Inc. served as financial advisor and Cravath, Swaine & Moore LLP served as legal counsel to Mandalay Resort Group.
About Mandalay Resort Group
About MGM MIRAGE
In connection with the proposed transaction, Mandalay Resort Group will be filing proxy statements and other materials with the Securities and Exchange Commission.
This news release contains forward-looking statements within the meaning of the "safe harbor" provisions of the Private Securities Litigation Reform Act of 1995, including statements about future financial and operating results and MGM MIRAGE's anticipated acquisition of Mandalay Resort Group.
Mandalay Resort Group
|Also See:||MGM MIRAGE Reports 1st Qtr 2004 Net Profit of $105.8 million Double from 2003; Most Profitable Quarter Ever / April 2004|
|Mandalay Resort Group Reports 2003 4th Qtr Net Income Rose to $22.8 million from $4.2 million a Year-earlier; 22% Increase in RevPAR for Las Vegas Strip Hotels / March 2004|