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MGM Grand stacks chips
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November 9, 1998: 1:29 p.m. ET
The hotel, casino giant will acquire Primadonna Resorts in $267M stock swap
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NEW YORK (CNNfn) - Follow MGM Grand's yellow brick road these days and the glittering diversions along the way -- from casinos to theme parks to hotels -- could deter you from ever reaching Oz.
As part of an industry trend toward glitzier and grander offerings, the Las Vegas-based entertainment, gaming and hotel giant said Thursday it planned to acquire Primadonna Resorts Inc. in a stock swap valued at around $267 million.
Under the terms of the deal, MGM Grand, operator of the MGM Grand Hotel/Casino in Las Vegas and a half-owner in the neighboring New York-New York Hotel/Casino, will offer 0.33 shares of its common stock for each Primadonna share, for a total of 9.5 million shares.
That would value the deal at $267.2 million, based on MGM Grand's (MGG) Friday closing price of 28-1/8 on the New York Stock Exchange. By midday Monday, the stock had edged up another 3/8 to 28-1/2.
Shares of Primadonna (PRMA) were down 5/16 at 8-11/16 on the Nasdaq.
Including debt assumption of $232 million, the transaction is worth just over $600 million.
The parties said they expect to finalize the agreement in the next two weeks. The merger is expected to be completed in the first quarter of 1999.
For MGM, which already owns the world's largest hotel/casino, the 5000-room MGM Grand Hotel and Casino on the Las Vegas Strip, the acquisition underpins a feverish quest to dominate the gaming and entertainment industry.
From Buffalo Bill's to Whiskey Pete's
Just across the Strip stands the 2,000-room New York-New York Hotel and Casino, MGM Grand's 50 percent joint venture with Primadonna resorts. Primadonna owns Whiskey Pete's, Buffalo Bill's and the Primm Valley Resort in Primm, Nevada, and two championship Golf courses in California.
The Primm resort and golf courses are situated on about 590 acres of company-owned land in California and Nevada, of which 140 acres remain undeveloped.
MGM Grand already presides over a global entertainment business -- managing casinos in Darwin, Australia, and in several cities in South Africa. The company also has plans to develop a temporary casino in Detroit, Michigan, to be replaced with a permanent hotel/casino in the future.
The MGM deal comes at a time when ostentation is reaching new highs, even in glitz-saturated Las Vegas.
Mirage Resort manager Steve Wynn has left the gaming industry slack-jawed with his lavish $1.9 billion Bellagio casino -- the most expensive such facility ever built.
The Vegas-based casino, which opened last month, comes complete with a mini-version of Italy's Lake Como, mosaic-tile floors, etched glass ceilings, a two-room gallery of fine art, and $30 million worth of dancing fountains at the grand entryway.
In another recent megadeal, Harrah's Entertainment Inc., a leading national casino company, acquired Rio Hotel & Casino for $518 million in August. The blockbuster marriage is expected to create a gambling Goliath with $2.9 billion in revenue.
And in January of this year, Crescent Real Estate Equities Co. bet the house on a $1.7 billion buyout of Las Vegas-based Station Casinos.
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