Making the acquisition as Riv Acquisition Holdings Inc., the private investment group is led by Chicago developer and casino investor Neil Bluhm; Barry Sternlicht, chief executive of Starwood Capital Group; Las Vegas-based real estate developer Brett Torino; and Paul C. Kanavos and Robert Sillerman of Flag Luxury Properties LLC.

"Investment in the nostalgic Las Vegas Strip resort is long overdue and it is now important to provide the Riviera with the necessary capital and resources to compete in its market segment," says Scott Butera of Riv Acquisition Holdings Inc.

Under the agreement, Riv Acquisition Holdings Inc. will acquire all of the outstanding shares of Riviera Holdings Corp. for $17 apiece, not including shares held by Riviera's CEO William Westerman, who has agreed to sell his shares to the investment group for $15 apiece and to vote in favor of the buyout. The deal includes Riv assuming or repaying $215 million in outstanding Riviera debt. Westerman says the investment group plans to invest additional capital to enable Riviera to "maintain its competitive position and grow."

The acquisition represents a premium of 21% over Riviera's closing stock price on December 23, 2005, the last full trading day before the agreement with Westerman was reported, and a premium of 13.3% over Riviera's closing stock price on March 22, 2006, the day before Riviera reported that it had resumed discussions with the investment group at $17 per share.

Bear Stearns & Co., Inc. served as financial advisor to Riv Acquisition Holdings Inc. and Cadwalader Wickersham & Taft LLP acted as legal advisor. Jefferies & Company Inc. served as financial advisor to Riviera Holdings Corporation and Gordon & Silver Ltd. acted as legal advisor.