Casino operator MGM Mirage said Wednesday it is forming a long-term strategic partnership with Dubai World that includes an investment of about $5 billion.
The investment includes $2.7 billion for the sprawling CityCenter project in Las Vegas and up to $2.4 billion in purchases of MGM Mirage common stock.
The deal will give Dubai World a minority stake in MGM, with both companies entering a joint venture for CityCenter.
The joint venture, CityCenter Holdings LLC, will be owned equally by MGM Mirage and Infinity World Development Corp., a Dubai World subsidiary. The joint venture will fully own the CityCenter megaresort when it closes, which is anticipated to happen by the end of the year.
Dubai World's initial $2.7 billion CityCenter investment will give it 50 percent equity in the development, with MGM retaining the rest. MGM also has the opportunity to receive an additional $100 million from Dubai if it completes the project on time and on budget.
MGM will remain CityCenter's developer and will be paid an unspecified management fee by the joint venture to operate the development's casino, retail space and condo-hotel tower.
Dubai's stock purchase of MGM will be performed through Infinity. The company will buy up to 28.4 million MGM shares, or about a 9.5 percent equity stake.
The purchase will be made through a tender offer for 14.2 million outstanding shares priced at $84 per share, which is a 13 percent premium to MGM's closing price of $74.32 on Tuesday. The company will also buy an additional 14.2 million shares from MGM at the same price.