In a surprise move, MGM Mirage, one of the largest gaming companies in the world, recently made a $7.65 billion bid to buy Mandalay Resorts, one of the other largest gaming companies in the world.

If the sale goes through, the combined company would not just be one of the, but the largest gaming company in the world, with 33 casinos and nearly $7 billion in annual revenue.

(However, talks reached a standstill late last week.)

In Las Vegas, MGM Mirage operates the MGM Grand, New York-New York, the Boardwalk, Bellagio, Mirage and Treasure Island.

Mandalay Resorts runs Mandalay Bay, Luxor, Excalibur, Monte Carlo, and Circus Circus.

The purchase plan set a price of about $68 per share on a company that was, prior to the announcement, trading at around $60. After the news broke, the stock shot up to more than $70 a share, and most gaming analysts said they expected any final deal to approach $80 a share -- nearly $9 billion in all.

Of course, there are a lot of things in the way of the buyout actually taking place. First and most important is whether Mandalay Resorts is actually for sale. There has been no official comment from the folks at Mandalay except to say they are reviewing the surprise offer. If they say, "Thanks, but no thanks," it is possible for MGM Mirage to start a hostile takeover bid, but most gaming analysts think that would wind up doing more harm than good.

Second is whether the myriad regulatory committees involved -- most notably the SEC and the Nevada Gaming Commission -- would even allow such a thing. The combined company would operate more than half of the approximately 72,000 rooms on the Strip, making it not only the dominant player in town but perhaps, in some people's eyes, a monopolistic one.

A third, but distantly possible, roadblock could be in the form of another party stepping in to create a bidding war for the company, if in fact officials at Mandalay Bay suggest they are serious about selling. Caesars Entertainment and Harrah's Entertainment, the two other big Vegas players, probably won't take this laying down and could very well put up offers of their own.

Lastly, there's the little matter of whether shareholders would approve such a deal. The combined company would carry a staggering $7 billion in debt, making it susceptible to all sorts of problems if there were any kind of downturn in the local or national economy. With the huge increases in gaming stock prices over the last year -- many have nearly doubled -- investors may want to keep the status quo.

MGM Mirage was created by the merger of the MGM Grand corporation and Mirage Resorts back in 2000, a deal that at the time was the largest in the gaming industry history, at $6.4 billion. In addition to the big Vegas properties, it also owns Buffalo Bill's, Primm Valley and Whiskey Pete's in Primm at the Nevada-California border; the Beau Rivage in Biloxi, Miss.; and the MGM Grands in Detroit and Darwin, Australia. It is also co-owner of the new Borgata Resort in Atlantic City, along with the Boyd Gaming Company.

Mandalay Resorts is the company formerly known as Circus-Circus Enterprises, originally formed back in 1968 with the opening of the titular big-top theme casino. Beyond Vegas, it owns the Circus-Circus and Silver Legacy in Reno, Nev; the Colorado Belle and Edgewater properties in Laughlin, Nev.; the Gold Strike and Nevada Landing casinos in Jean, Nev; the Railroad Pass casino in Henderson, Nev.; the Gold Strike in Tunica, Miss.; the Motor City Casino in Detroit; and the Grand Victoria riverboat in Elgin, Ill.

If the deal actually happens, what does it mean to you? Well, probably nothing for many, many years. It could set off another round of mergers and acquisitions by other companies who are looking to be able to compete with the monolithic MGM Mirage Mandalay company, so some of the independent or smaller players could get gobbled up. It could also mean even higher room rates as intercompany competition is reduced.

It also could mean a radical change of plans for the future of both companies. On the forward-looking list for MGM Mirage was redevelopment of the Boardwalk property in Vegas, and Mandalay Resorts was planning to add another mega-resort just south of Mandalay Bay. Whether those things will go forward or not is now in question.

As is the fate of several "underperforming" hotels in the portfolio, such as Circus-Circus, which could be sold off. Excalibur could also, believe it or not, be torn down to make way for something else.

Of course, all of that is merely speculation and, as mentioned, years away from actually happening. I'll keep you updated on the progress of the deal so stay tuned.

The Full Story

Vegas Notes: Yes, Rooms Getting More Expensive
Vegas Corporate Giant Makes Offer For Other Giant
Vegas Q&A: Does L.A. Have Good Casinos?

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