Market waits on Mandalay outcome
(CNN) -- An announcement is expected early Wednesday in the United States on whether a revised $7.9 billion offer by MGM Mirage for Las Vegas-based casino operator Mandalay Resort Group has been successful.
The MGM Mirage board, which met Tuesday to review the deal, has backed the management plan to take over Mandalay, according to a source quoted by Reuters news agency.
Mandalay's board also met Tuesday to consider MGM Mirage's improved offer, following weekend discussions between the two companies.
According to the Reuters source, Mandalay has also approved the deal.
MGM Mirage's takeover bid is pitched at $71 cash for each Mandalay share.
Mandalay shares closed 28 cents higher at $67.88 on the New York Stock Exchange Tuesday, while MGM Mirage rose $1.30 to $49.50.
Analysts say Mandalay shares are still below the proposed takeover price because of fears the deal might be knocked back by regulators.
MGM Mirage said Monday that management of both companies "have agreed on all material terms" of the new offer.
But Mandalay cautioned there were "no assurances" that the deal was done.
Assuming Mandalay's board approves the takeover, the companies would make an announcement Wednesday morning, the source said.
Any agreement will still require approval by U.S. state and federal regulators.
Last Friday Mandalay turned down an initial takeover bid from MGM Mirage that would create the world's largest casino company.
That bid was pitched at $68 a share for a total value of $7.65 billion.
The revised offer was $71 a share in cash, plus $600 million in convertible debentures and the assumption of about $2.5 billion in debt, for a total $7.9 billion.
MGM Mirage said Monday the revised offer represented a 30 percent premium to Mandalay's share price at June 3, when the first offer was made.
Mandalay, which runs the Mandalay Bay, Luxor, Excalibur and eight other casinos in the U.S. state of Nevada, said the terms would offer "significantly greater assurances of closing" for Mandalay's shareholders than the first offer.
On Friday, Mandalay had said there was not enough assurance from MGM Mirage that it would continue with the deal if regulators opposed it.
"The terms of the MGM Mirage proposal asked Mandalay shareholders to bear a far disproportionate share of the risk. It is not in the best interest of Mandalay shareholders to agree to a deal that gives MGM control over whether it closes," Glenn Schaeffer, president and chief financial officer of Mandalay Resort Group, said in the Friday tatement.
MGM Mirage, which is controlled by 87-year-old billionaire Kirk Kerkorian, is the No. 3 U.S. casino company. It owns or operates 12 casinos in Nevada, New Jersey, Mississippi, Michigan and Australia. It also has stakes in two other resorts in Nevada and New Jersey, and 25 percent of British casino developer Metro Casinos.
MGM Mirage said Monday its own board was expected to meet Tuesday to consider the transaction.
Along with its Nevada casinos, Mandalay owns another in Mississippi and has stakes in four joint venture casinos.
