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MGM Mirage in talks to build hotels in China

December 13, 2006

Hotel and casino company MGM Mirage Inc. (MGM.N) said on Wednesday it is in advanced talks with Diaoyutai State Guesthouse in Beijing to create a joint venture to develop non-gaming luxury hotels and resorts globally.

MGM Mirage and Diaoyutai would target initially locations in China, MGM Mirage said, adding that a definitive agreement is expected in the first quarter of 2007.

This is the second such announcement this month by MGM Mirage, the No. 2 U.S. gambling company. The company said last week it was in discussions to create a joint venture with Abu Dhabi's Mubadala Development Co. to develop non-gaming luxury hotels globally.

MGM and Mubadala have signed a memorandum of understanding with an aim to create a joint venture by the first quarter of 2007 to build hotels beginning in Abu Dhabi, Las Vegas and Britain. Mubadala Development is wholly owned by the government of Abu Dhabi.

"We believe these initiatives ... are a smart way for MGM to meaningfully enhance its brand in mainland China and cross market mainland Chinese gaming and resort patrons into LV Strip," Bear Stearns analyst Joseph Greff wrote in a research note.

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