MGM MIRAGE (NYSE: MGM) and Dubai World are expanding their recently consummated relationship. After investing billions into buying a 50 percent stake in the massive under development CityCenter project in Las Vegas, Dubai World is now investing more heavily in a stake of the overall casino company.

Last week, Dubai World, which is the investment division of the Arab Emirate’s Dubai government, revealed that it purchased five million shares of MGM MIRAGE stock from a charity owned by Kirk Kerkorian, the majority shareholder of the company.
Kerkorian owns MGM stock through his company Tracinda but these shares were purchased from the Lincy Foundation.

In a filing with the United States’ Security Exchange Commission a division of Dubai World named Cayman LP agreed to buy five the million shares for a total purchase price of $424,000,000, or $84.80 per Share. Cayman LP and the Lincy Foundation consummated the acquisition contemplated by the Lincy Stock Purchase Agreement on December 24, 2007.

Infinity World - another Dubai world division-- and Cayman LP currently now own an aggregate of 19,548,838 Shares, which represent approximately 6.5% of the currently issued and outstanding Shares. This calculation is based upon the total number of 299,380,038 outstanding Shares reported in the Issuer’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2007.

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The SEC filing document reads that the group is looking to have someone nominated to the MGM MIRAGE Board. “Upon obtaining certain requisite authorizations from gaming authorities with regulatory authority over the Shares and Infinity World’s ability to nominate directors of the Issuer, Infinity World intends to exercise its right pursuant to the Company Stock Purchase Agreement to designate a nominee for election to serve on the Issuer’s board of directors,” noted the document.

In November, Dubai World contributed approximately $2.96 billion for 50 percent of the equity in CityCenter. Following the close of the joint venture transaction, MGM MIRAGE received a cash distribution from the joint venture of approximately $2.47 billion. The joint venture retained approximately $490 million to fund near-term construction costs. The joint venture will obtain project specific financing to fund remaining project costs.

The joint venture, CityCenter Holdings LLC, is owned equally by MGM MIRAGE and Dubai World. CityCenter Holdings LLC will own 100 percent of CityCenter, a mixed-use luxury residential, resort and retail complex currently being developed by MGM MIRAGE on the Las Vegas Strip.

"This transaction is a seminal moment in the history of our company, just as the development of CityCenter is a determining milestone for the future of Las Vegas," said Terry Lanni, Chairman and CEO of MGM MIRAGE when the CityCenter deal was announced. "The complimentary combination of assets and expertise held by MGM MIRAGE and Dubai World creates opportunities that were previously unavailable to us before this association was formed. Our partnership at CityCenter represents but the first step in a long-term relationship that will benefit our community, our company and our shareholders."

Now it looks as if the Group may be quietly trying to acquire more shares of the company. And will be permitted to own a sizable stake. According to the SEC filing the Infinity World Group division of Dubai World may purchase additional Shares, at any time and from time to time in open market purchases, privately negotiated purchases or otherwise. “In the event that the Infinity World Group acquires any additional Shares, any such increase in ownership may be subject to gaming authority approval in each jurisdiction where the Issuer does business. In addition, pursuant to the Company Stock Purchase Agreement, the Infinity World Group has covenanted to refrain from acquiring beneficial ownership of Shares in excess of twenty percent of the total outstanding Shares, subject to certain limited exceptions,” the filing reads.

During the last year MGM shares have risen nearly 50 percent and now hover around $85 per share.

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