The existing takeover agreement, signed in April, is for $17 per share, or about $211.5 million. The competing offer is for $20 per share, or about $248.6 million, and is not contingent upon financing. The competing offer represents a slight premium over Riviera's closing share price on Monday of $19.72. Riviera says it is reviewing the proposal and has rescheduled its shareholder vote on the $17 offer for Aug. 29.
The competing offer for the company comes from International Gaming & Entertainment LLC, a special-purpose affiliate of BT Enterprises LLC, a Boston based merchant equity fund. The principals of IG&E include Jeffrey Wu, Michael Signorelli and Bagus Tjahjono. Wu is the majority shareholder and a director of United International Bank in New York.
The current merger agreement is with Riv Acquisition Holdings Inc., Riv is a 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.
Under the existing merger 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 previously agreed to sell his shares to Riv for $15 apiece and to vote in favor of the buyout. Both deals include the assumption or repayment of $215 million in outstanding Riviera debt.
The agreement with Riv sparked a substantial response from investors, including class-action complaints and scathing letters from the company's largest shareholders vowing to vote against the merger. Among other things, the letters question the Riviera Board's valuation of the company's real estate in Las Vegas, which represents one of the last large developable parcels of land on the Strip.
One letter from D. E. Shaw Laminar Portfolios LLC and certain of its affiliates, which hold about 9.8% of Riviera's outstanding shares, started out as follows: "…the proposed transaction at $17 per share represents a steal for the buyers. Given that the buyers, as the proxy statement discloses, were willing to pay as high as $23 per share less than six months before entering into the current merger agreement, we can only assume that they agree."
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