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Kerkorian boosting MGM

Tracinda buys stock at 26% premium over its value

An MGM stock rise outpaced modest gains in the broader market Thursday as Lion’s majority owner Kirk Kerkorian commenced a cash tender offer for 15 million shares at a substantial premium over the market price.

Kerkorian’s Tracinda investment company first announced plans for the tender offer on July 29. By offering to buy up to 15 million shares through such an action, he has effectively pumped up the value of the stock while also boosting his MGM stake to as much as 73% from a previous 16%.

The price of the tender offer reps a 26% premium over the value of Lion shares at the time it was announced and a 12% premium over the stock’s closing price on Wednesday.

MGM shares closed up 38¢, or 2.66%, at $14.65 Thursday.”The fact that real papers are going out to shareholders signals rhetorically that the tender offer is for real,” Sanders Morris Harris analyst David Miller said.