Kirk Kerkorian’s Tracinda Corp. is selling nearly 0 million worth of MGM Resorts International stock to UBS under an agreement concluded between Tracinda and the investment bank last year.
Swiss-based UBS agreed in June to pay the fund, which manages the late billionaire’s wealth, $2.12 per share, or $42.4 million, for an option on 20 million shares at a strike price of $23.94 per share.
The stock (NYSE:MGM) has risen 20 percent since then amid optimism about global economic growth, a rebound in Macau gaming revenue, strong growth in MGM’s core Las Vegas market and the company’s expansion into Maryland and Massachusetts.
The strike price was hit on February 7, when MGM closed at $29.16. Assuming the price stays above that the sale will run through this Tuesday at a rate of 2 million shares a day. Tracinda will at that point receive a total of $521 million, including option payments, assuming the entire 20 million shares are sold. UBS will earn about $60 million before taxes.
Kerkorian, who died in June 2015 at the age of 98, left instructions that Tracinda “execute an orderly disposition” of MGM shares. The fund owned 91.2 million shares, or about 16 percent of the company, at the time.
Tracinda sold 4 million shares valued at about $100 million last year, according to U.S. Securities and Exchange Commission filings.
Upon completion of the deal with UBS, Tracinda will own 67.2 million shares, or about 12 percent of the company, a stake valued currently at around $1.96 billion.
