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Arnold M. Knightly

Cosmopolitan developer bids anew for Riviera

14 May 2007

LAS VEGAS, Nevada -- The battle for control of Riviera's parent company might be escalating into a bidding war.

A $30 per share offer for Riviera Holdings Corp. was submitted Friday by an investment group led by Bruce Eichner, the New York-based developer behind the $3 billion Cosmopolitan project currently under construction on the south Strip.

The offer is Eichner's second bid for Riviera Holdings and is 11 percent higher than the most recent buyout offer submitted March 26 by Riv Acquisition Holdings.

A $21 per share offer by Eichner expired in December after a 30-day exclusive negotiating period.

Riviera Holdings has also hired the financial advisory firm Jefferies & Co. to help the board with the possible sale of the company.

Eichner said the Riviera hotel-casino on the Strip's north end represents a redevelopment opportunity in a rapidly changing area.

Boyd Gaming Corp. expects to break ground next month on the $4.4 billion Echelon on the old Stardust site. A $2.8 billion Fontainebleau hotel-casino project is proposed to the north. And MGM Mirage bought two parcels of land totaling 33.4 acres for $575 million nearby.

MGM Mirage also owns Circus Circus across the street from the Riviera.

"All of that makes it an attractive neighborhood," Eichner said. "It gives me a sense of time to think through a meaningful redevelopment of the property long-term."

Riv Acquisition's offer was blocked by the board on grounds that the investment group colluded with two major shareholders of the company for additional shares.

The investment group controls 20 percent of Riviera Holdings stock and the agreement would have given the group an additional 9.2 percent.

Riv Acquisition sued in District Court on April 17 and followed 10 days later by proposing a slate of nominees for board elections slated for the May 15 shareholders meeting.

Riv Acquisition would comment on the competing bid and wouldn't say whether it would raise its offer in light of the higher bid.

Riviera Holdings Corp. shares gained $1.15, or 3.61 percent, Friday to close at $33 on the American Stock Exchange. Volume was about 248,000 shares, about five times normal trading volume.

Cosmopolitan developer bids anew for Riviera is republished from