Not so fast
Not so fast
Riviera shareholders counter bid for company
Just weeks after Riviera Holdings Corp. agreed to a $426.5 million buyout by a group of investors last month, a second bidder emerged for Riviera Holdings Corp., touching off a potential showdown for control of the Las Vegas-based company.
New York-based investment bank D.E. Shaw went public with its interest to acquire Riviera Holdings, saying it would at least match the proposed $17 per share offer that a group of investors operating under the name Riv Acquisition Holdings offered in April.
D.E. Shaw, which controls almost 10 percent of Riviera Holdings' current shares, said its offer was intended to block that of Riv Acquisition Holdings, which Shaw and other Riviera shareholders have said is undervalued.
Marc Sole, senior vice president of D.E. Shaw, noted the active market for gaming acquisitions, including Aztar Corp., which has seen offers from four different companies-Pinnacle Entertainment, Ameristar Casinos, Colony Capital and Columbia Sussex. Aztar owns the coveted Tropicana Las Vegas site on the south end of the Las Vegas Strip. Sole said a fair-value deal for Riviera Holdings-and its Riviera casino properties on the north end of the Las Vegas Strip and in Black Hawk, Colo.-might be closer to $36 per share rather than $17 per share.
"We would be willing to concede that land on the south end of the Strip could trade at a premium to land at the north end, but a 90 percent premium (per acre which the deal represents) seems, to put it mildly, a bit of a stretch," he told the Las Vegas Review-Journal.
But gaming analysts have indicated a $17 per share price to be closer to fair market value, and they warn that investment in the Riviera Hotel & Casino property in Las Vegas would be riskier than with the also-coveted Tropicana site, as north Strip developments in the years ahead could overshadow any investment in the Riviera.
"Either way, there's 10 years of risk involved with the Riviera (but not the Tropicana)," one unnamed analyst told the paper.
Nevertheless, Riviera shareholders seem adamant about blocking Riv Acquisition Holdings' offer, which was made by an investment group comprised of Chicago developer and casino investor Neil Bluhm, Starwood Capital Group Chairman Barry Sternlicht, Las Vegas-based real estate developer Brett Torino, and Flag Luxury Properties Chairman Paul Kanavos.
In addition to D.E. Shaw, two other major shareholders-Alberta, Canada-based Triple Five Group and Plainfield Asset Management-each have indicated they will vote against a buyout by Riv Acquisition Holdings. Both groups control 9 percent of the company each, and between all three they control 28 percent of Riviera Holdings.
Those involved with Riv Acquisition Holdings, by comparison, control only 17 percent of the company. According to the company's charter, a 60 percent majority is needed from outstanding shareholders to approve any deal.
It is expected to be 90 to 120 days before shareholders vote on these or any additional offers that might arise.
-Andy Holtmann
Riviera shareholders counter bid for company
Just weeks after Riviera Holdings Corp. agreed to a $426.5 million buyout by a group of investors last month, a second bidder emerged for Riviera Holdings Corp., touching off a potential showdown for control of the Las Vegas-based company.
New York-based investment bank D.E. Shaw went public with its interest to acquire Riviera Holdings, saying it would at least match the proposed $17 per share offer that a group of investors operating under the name Riv Acquisition Holdings offered in April.
D.E. Shaw, which controls almost 10 percent of Riviera Holdings' current shares, said its offer was intended to block that of Riv Acquisition Holdings, which Shaw and other Riviera shareholders have said is undervalued.
Marc Sole, senior vice president of D.E. Shaw, noted the active market for gaming acquisitions, including Aztar Corp., which has seen offers from four different companies-Pinnacle Entertainment, Ameristar Casinos, Colony Capital and Columbia Sussex. Aztar owns the coveted Tropicana Las Vegas site on the south end of the Las Vegas Strip. Sole said a fair-value deal for Riviera Holdings-and its Riviera casino properties on the north end of the Las Vegas Strip and in Black Hawk, Colo.-might be closer to $36 per share rather than $17 per share.
"We would be willing to concede that land on the south end of the Strip could trade at a premium to land at the north end, but a 90 percent premium (per acre which the deal represents) seems, to put it mildly, a bit of a stretch," he told the Las Vegas Review-Journal.
But gaming analysts have indicated a $17 per share price to be closer to fair market value, and they warn that investment in the Riviera Hotel & Casino property in Las Vegas would be riskier than with the also-coveted Tropicana site, as north Strip developments in the years ahead could overshadow any investment in the Riviera.
"Either way, there's 10 years of risk involved with the Riviera (but not the Tropicana)," one unnamed analyst told the paper.
Nevertheless, Riviera shareholders seem adamant about blocking Riv Acquisition Holdings' offer, which was made by an investment group comprised of Chicago developer and casino investor Neil Bluhm, Starwood Capital Group Chairman Barry Sternlicht, Las Vegas-based real estate developer Brett Torino, and Flag Luxury Properties Chairman Paul Kanavos.
In addition to D.E. Shaw, two other major shareholders-Alberta, Canada-based Triple Five Group and Plainfield Asset Management-each have indicated they will vote against a buyout by Riv Acquisition Holdings. Both groups control 9 percent of the company each, and between all three they control 28 percent of Riviera Holdings.
Those involved with Riv Acquisition Holdings, by comparison, control only 17 percent of the company. According to the company's charter, a 60 percent majority is needed from outstanding shareholders to approve any deal.
It is expected to be 90 to 120 days before shareholders vote on these or any additional offers that might arise.
-Andy Holtmann
