Through The Fly's Eyes: Kirk Kerkorian & MGM Mirage

from Kevin Shult of Theflyonthewall.com

Kerkorian Dumps Plans for Joint Venture with Sol Kerzner

Today’s Wall Street Journal reports that Kirk Kerkorian has dropped his plans to acquire two of MGM Mirage's (MGM) gems, the Bellagio Hotel and the $7.4 billion project City Center, and instead opt for a joint venture with Sol Kerzner to create a multi-billion dollar resort at the north-end of the Las Vegas strip.

That news today sent MGM shares down more than 10% in pre-market trading and currently sits at $80.97, down 6.4% this afternoon.

Kerkorian's announcement to acquire the Bellagio and City Center last month seemed to put all of MGM in play, with the company forming a special committee to advice management on how to proceed. Shares of MGM Mirage -- which Mr. Kerkorian owns a 56% stake in - have jumped as much as 27% since last month's offer.

The real question: Is MGM Mirage still a takeover target? There are a number of analysts that remain convinced that MGM is a prime candidate, possibly by private-equity players looking for land deals. MGM owns a third or more of the Vegas Strip and the land could fetch a pretty penny -- BMO Capital believes a successful bid for MGM could be worth more than $100 a share.

But what about Kerkorian? Dana Cimilluca, a writer for the WSJ, considers Kerkorian's decisions a sign that it may be time for him to retire. She says that Kerkorian has now swung and missed three times: The unsuccessful attempt to ally with another auto maker--General Motors (GM), the failed Chrysler (DCX) bid and now the retreat from MGM's two gems.

That may seem harsh, but hey, the man is 90