LAS VEGAS-Dubai World is investing upward of $5 billion in MGM Mirage Inc. and its massive CityCenter development on the Las Vegas Strip. The developer of the Palm and World developments off the coast of Dubai has agreed to acquire a 50% stake in CityCenter for $2.7 billion and up to 9.5% of MGM Mirage common stock at $84 per share, which would total $2.4 billion.

To effect the CityCenter deal, the two companies will form a 50-50 joint venture, CityCenter Holdings LLC, which will own 100% of CityCenter. Targeted for completion in late 2009, the project includes a 4,000-room resort casino, 2,650 condominiums in multiple towers, two 400-room non-gaming hotels and 470,000 sf of retail and entertainment space. MGM will receive an extra $100 million from Dubai World if the project is completed on schedule and on budget.

To gain its stake in MGM Mirage Inc., Dubai World will make a public tender offer for 14.2 million shares at $84 per share, a 13% premium over yesterday’s closing share price, and will acquire an additional 14.2 million shares directly from MGM Mirage at the same price.

The tender offer will commence sometime next week and the direct sale will be completed concurrently. The joint venture arrangement is expected to be complete by the end of the year.

As part of the JV deal, MGM Mirage will continue to serve as developer of CityCenter and upon completion, will receive an ongoing management fee from the joint venture to operate the resort casino as well as the development’s retail activities and the Vdara condo-hotel tower.

“This transaction is immediately accretive to long term earnings and will have a profound impact on our balance sheet,” says Terry Lanni, MGM Mirage chairman and CEO.

Dubai World chairman Sultan Bin Sulayem says the company has been seeking international expansion. MGM was chosen as the vehicle due to its similar experience in large-scale developments as well as its “superior” assets, locations, and brands. “Our vision is to create a global portfolio of signature properties that will create value for generations to come,” he says.

Credit Suisse Securities acted as financial advisors to Dubai World. UBS Investment Bank served as financial advisors to MGM MIRAGE. Paul, Hastings, Janofsky & Walker LLP acted as legal counsel to Dubai World and Christensen, Glaser, Fink, Jacobs, Weil & Shapiro, LLP acted as legal counsel to MGM MIRAGE.

MGM Mirage owns and operates 17 properties located in Nevada, Mississippi and Michigan, and has investments in three other properties in Nevada, New Jersey and Illinois. In addition, the Company has major new developments under construction in Nevada, Michigan and Macau S.A.R.

Dubai World is a major investment holding company with a portfolio of businesses that includes DP World, Jafza, Nakheel, Dubai Drydocks, Maritime City, Istithmar, Kerzner, One & Only, Atlantis, Barney’s, Island Global Yachting, Limitless, Inchcape Shipping Services, Tejari, Technopark and Tamweel. Its real estate projects include Nakheel’s Palm and World developments as well as real estate investments in the US, the UK and South Africa. The conglomerate has developed 80,000 luxury residential villas and apartments and approximately 3 million sf of retail space.

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