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Prudential Ups Mandalay Resort to Neutral


Prudential upgraded Mandalay Resort (MBG) to neutral from underweight.

Analyst William Lerner says MGM's bid for Mandalay would mark the largest acquisition in gaming history and create the world's largest gaming company with $7.5 billion in revenues and $2 billion in EBITDA. He estimates the deal would be accretive to MGM's EPS by about 50 cents (pro forma) in 2004, and nearly 70 cents in 2005.

In addition to the accretion, Lerner believes the deal makes sense on the basis of cost savings, synergies, greater Las Vegas Strip exposure in a positive secular environment, greater access to convention business, access to Chicagoland, and an opportunity to bolster margins and growth in 2005 and beyond.


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