Thursday, June 11, 2009

MGM Mirage Weighs Business Alliance With Malaysian Casino Owner Genting

By TAMARA AUDI Las Vegas-based gambling giant MGM Mirage and Malaysian gambling concern Genting Bhd. are discussing a broad range of business partnerships in the global gambling industry, MGM Mirage Chief Executive Jim Murren said Thursday. Any partnership could give Genting access to lucrative business in Macau, China's gambling enclave where MGM operates, and offer MGM Mirage entree into other regions of Asia where Genting has a major presence. Genting recently invested $200 million in MGM Mirage, with half of the amount for a 3.2% equity stake and half on a bond issue. Mr. Murren said officials from the two companies have had a long relationship, and are interested in working together on a variety of projects world-wide. "We're just starting to brainstorm about global marketing relationships, strategic ventures and partnerships," Mr. Murren said. A relationship with Genting "in particular holds great interest to me because they are so great at what they do. I think there's a commonality of philosophy. ...It's a very powerful potential alliance." "We are constantly looking to broaden our portfolio of strategic investments and strengthening our partnerships around the world," said Justin Leong, head of strategic investments and corporate affairs for Genting Bhd. "We have had a variety of discussions with MGM but they are still at an early stage," he added. "We hold MGM in the highest regard -- they really are one of the icons of the gaming industry. We look forward to further discussions with MGM." Genting dominates the gambling industry in Malaysia and plans to open a casino resort in Singapore next year. MGM Mirage dominates the Las Vegas Strip with prominent properties like the Bellagio and the Mirage. It also operates an MGM Grand in China's gambling enclave of Macau, considered the most lucrative gambling market in the world. "We have no overlap of business and we have a very similar approach to business," Mr. Murren said of Genting. In the past, MGM Mirage has struck joint-venture partnerships with real-estate developers and other casino operators. In Connecticut, for example, MGM Mirage struck a licensing deal with the Mashantucket Pequot Indian tribe, which built an MGM Grand as part of its Foxwoods casino resort. In New Jersey, MGM Mirage owns half of the Borgata casino as part of a deal with Boyd Gaming Corp. MGM Mirage recently launched a separate hotel division and has struck deals with developers to spread the MGM Grand and Bellagio brands around the world. Industry observers speculated that Genting is interested in buying MGM Mirage's stake in the Macau casino, which it operates in partnership with Pansy Ho, the daughter of Chinese gambling magnate Stanley Ho. Ms. Ho was recently declared an "unsuitable" partner for MGM Mirage by New Jersey gambling regulators, potentially jeopardizing MGM Mirage's ability to operate in that state. Were Genting to purchase MGM Mirage's stake in the Macau casino, that would resolve any issue with New Jersey gambling regulators. Mr. Murren said that option "was never even discussed" by the two companies. However, he did not rule it out. Mr. Murren said MGM Mirage will "explore all our options in Macau" in light of the New Jersey gambling report on Ms. Ho. "We do want to be in Macau under the right circumstances." He said the company's casino is "underperforming" in Macau. "We need to make more money there and be more successful there." —Jonathan Cheng contributed to this article. Write to Tamara Audi at tammy.audi@wsj.com

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