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LAS VEGAS-Kirk Kerkorian’s Tracinda Corp. announced this morning its intention to make a tender offer for up to 15 million shares of MGM Mirage at $55 per share. Tracinda, which is solely owned by the billionaire, already owns 158.4 million shares, or 56.3% of MGM’s outstanding stock. If successful, the tender offer would raise Tracinda’s ownership stake to 61.7%.

The offer is a 12% premium to MGM’s $49 closing share price on Tuesday. In noontime trading today (Wednesday, Nov. 22) the company’s share price stood at a 52-week high of $54.06, up more than 10% on the day.

JP Morgan Securities gaming analyst Harry Curtis told clients this morning in an email that the offer “shows that Kerkorian sees significant value in the shares, which we believe is largely related to future development in Macau and Las Vegas. In the near term, it could also suggest that trends in Las Vegas are very strong.”

The $55 offer is a valuation that Curtis says he has “long thought as being a fair value for future cash flows” in 2007 and 2008. The offer implies an 8.6x debt adjusted multiple on 2008 EBITDA. “Looking forward, it suggests that there is further upside beyond $55 over the next 12-18 months,” Curtis said, reiterating his Overweight rating.

MGM Mirage owns the Bellagio, MGM Grand and Luxor casino resorts on the Las Vegas Strip and is currently developing its CityCenter. At $7 billion, the 66-acre Strip project is the largest privately financed development in the US.

MGM Mirage Inc. earlier this month reported that third-quarter profit climbed 68%. MGM’s net income rose to $156.3 million, or $0.54 per share, in the third quarter of 2006 from $93.2 million, or $0.31 per share, in the third quarter of 2005. Third quarter revenue increased 5% from one year ago to $1.90 billion. Analysts’ average expectation was $0.41 per share on revenue of $1.83 billion.

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