Riviera Holdings fends off rivals with new $30 offer

May 15, 2007 6:24 AM

Management of Riviera Holdings Corp. (RIV), attempting to fight off a rival’s bid to take over the company, received two pieces of good news just prior to Tuesday’s (May 15) shareholders’ vote.

The news was strong enough to force the opposition to fold.

Late last week, Riviera Holdings received an offer from real estate developer Ian Bruce Eichner and Dune Capital Management LP to acquire the company for $30 per share, or $3 per share more than the most recent bid from Riv Acquisition Holdings, whose aim to take over the company has been ongoing for more than a year.

The second piece of good news for Chairman and CEO Bill Westerman was the announcement that Institutional Shareholder Services (ISS) and Glass Lewis & Co., two companies that provide proxy advisory services, had both recommended that Riviera stockholders vote for all of Riviera Holdings Corp. directors and against a new slate of directors proposed by Riv Acquisition.

The ISS analysis said it found the Riv Acquisition group to have an "inherent conflict of interest."

"Given that the (RIV) board has started a process of reviewing strategic alternatives, hired an investment advisor and has received a $30 per share offer, we do not believe that support for dissident nominees is warranted," it wrote.

Glass Lewis concluded, "The election of dissident nominees could provide Riv Acquisition group with an unfair advantage in the sale of the company."

The favorable news for the existing management caused those who were attempting to oust them to back off. On Monday, Riv Acquisition said it was withdrawing its nomination of a slate of officers to succeed the existing directors.

"Our group is currently considering all of its options, which may include making a higher offer than the $30 per share expressions of interest that the board announced on May 11," the letter of withdrawal said.

Westerman said the board would review the Eichner group’s bid with Jefferies & Co. which was hired to explore the company’s strategic and financial alternatives.

On Monday, traders forced up the share price of RIV far above the $30 per share bid. The closing price was $34.70.

Project dumped

A high-profile group that had planned a $2.5 billion development at the intersection of Harmon Ave. and Koval Lane in Las Vegas has announced the cancellation of the project.

Developer Edge Group confirmed that its W Las Vegas project could not "overcome numerous significant challenges" after minority partner Starwood Hotel and Resorts Worldwide (HOT) pulled out of the deal.

This was the second project planned for the 22 acres site. The land was going to be used by actor George Clooney and night club magnate Rande Gerber for a project called Las Ramblas.

The Edge Group now plans to sell the property that has been described as a "prime piece of real estate."

Union defeated

A bid by the United Auto Workers to unionize the dealers at all 11 casinos in Atlantic City suffered its first defeat over the weekend.

Dealers at Trump Marina Hotel/Casino rejected the union’s bid by a vote of 183-175. This was the first union defeat. At four other Atlantic City casinos, the union won their votes handily.

Union leaders said the defeat would not deter them from attempting to organize the other properties. They blamed "a campaign of fear and intimidation" by Trump Marina management for the loss.

On June 2, the dealers at the Atlantic City Hilton and Bally’s Atlantic City will decide whether to accept union representation.

THE INSIDER: MTR Gaming Group Inc. (MNTG) said Monday it planned to install a synthetic Tapeta racing surface before its inaugural thoroughbred race meet begins on Sept. 1 at Presque Isle Downs in Erie, Pa.