Co. succeeds in 'Dutch Auction' tender offer
MGM shareholders — the little ones, at least — are tripping over themselves to dump the stock, at the right price.
The company Friday announced a healthy response to its “Dutch Auction” tender offer, with more than 16.5 million shares being offered at $17 per share or less. The company intends to buy back 10 million shares for $170 million.
Under the Dutch Auction format, shareholders were allowed to specify a price between $16.25 and $18 per share at which they would be willing to sell their stock back to the company. The company would then pick a price at which enough shares had been tendered to fill the 10 million-share quota.
Interestingly, the $17 price picked by MGM was higher than needed to attract 10 million shares. As a result, the shares tendered will be prorated, with each stockholder being allowed to sell approximately 60% of his or her shares offered.
The share price of MGM has been boosted since last summer by announcements of several buyback offers. Last fall, majority owner Kirk Kerkorian closed his own buyback, purchasing 15 million shares at $16 each. Shareholders tendered more than 65 million shares in that offer, an outstanding response considering there were only 81 million shares that were not owned by Kerkorian. After that buyback, Kerkorian’s ownership of the company stood at 73.1%.
MGM also has an ongoing stock repurchase program in effect.
Shares of MGM Friday closed down 13¢ at $16.89.