Riviera Stock Purchases Expected to Proceed
An affiliate of the investment group seeking to buy the Riviera's parent company was expected to complete its purchase of the stock owned by Riviera Chairman Bill Westerman today. Once the deal is completed, Riv Acquisition Holdings and its affiliates will control more than 2.1 million shares, or more than 18 percent, of Riviera Holdings Corp., which operates the 51-year-old Riviera and a slot machine casino in Black Hawk, Colo. In December, Westerman agreed to sell his holdings to affiliates of Riv Acquisition, an investment group that includes Starwoods Hotel chain founder Barry Sternlicht, Las Vegas developer Brett Torino and Chicago developer Neil Bluhm, for $15 a share. The group bought 1 million shares of Westerman's holdings in December and said Thursday it would buy the remaining 1.1 million shares today. "Once we received regulatory approval, we notified Riviera that we intended to complete the purchase of the shares this week," said Riv Acquisition President Scott Butera. The same group is asking Riviera shareholders to approve its $426.5 million purchase of the company at a stockholders meeting Tuesday. Riv Acquisition is offering to purchase all the company's outstanding shares for $17 a share.
The proposed deal has met opposition, however, from some of the company's largest shareholders because they believe the purchase price should be higher. Shares in Riviera closed at $19.78 in trading Thursday on the American Stock Exchange, off 16 cents, or 0.80 percent.
Several gaming analysts have predicted the deal might be rejected. The company needs affirmative votes from 60 percent of its outstanding shareholders. Representatives of groups holding 30 percent of the outstanding shares have already indicated they will vote against the buyout.
Morgan Joseph gaming analyst Adam Steinberg said the sale of Westerman's stock should have no effect on the outcome of next week's vote because he had already planned to support the deal.
In a statement, Westerman said the stock sale would not affect his role as Riviera's chief executive officer.
"I am very pleased that the Riviera stock, which I have held for many years, will be owned by a group who I believe is interested in the Riviera as an operating organization and is investing for the long term," Westerman said.
Last week, during the company's second quarter earnings conference call, Westerman urged shareholders to vote in favor of the buyout. If a shareholder doesn't vote, those shares would be tallied against the merger.