lso, a us$ 34 per share offer for the company made in May is apparently off the table. The financial advisory firm Jefferies & Co. was hired in May to assist the company’s board in the exploration of a possible sale, which includes the 10.5 hectare Riviera site on the Strip and a casino in Black Hawk, Colo.
Chairman and Chief Executive Officer William Westerman also said the potential cost for a buyer to terminate a debt agreement, uncertain shareholder support and the threat of new slot competition in Colorado helped lead to the decision to end the review.
Thirty-five potential bidders were contacted during the process, but no agreements were reached. "We will continue to review all opportunities and consider all proposals that we receive," Westerman said Friday during the company’s fourth-quarter earnings call. Westerman said discussions continue with Riv Acquisition Holdings, the investment group that made the us$ 34 per share offer in May.
Although Riv Acquisition declined to comment Friday, a filing with the Securities and Exchange Commission in January by the investment group’s majority shareholder expressed interest in purchasing the company, but not at $34 per share price.
Publicly traded FX Real Estate & Entertainment owned 1.4 million shares of Riviera Holdings, 11.32 percent of the outstanding shares on September 26. FX also owns 7.2 hectares at the corner of the Strip and Harmon Avenue, which is reportedly being held for an Elvis-themed development.
The federal filing said any new offer would be based partially on the prevailing market price of Riviera Holdings common stock. "We continue to explore an acquisition of Riviera Holdings ... with the goal of becoming a multiproperty owner and operator in Las Vegas," the January 3 filing said.
Riviera Holdings shares closed Friday at us$ 19.24, or 3.32 percent, on the American Stock Exchange. While the stock hit an all-time high, trading at us$ 39.12 per share on June 20 because of buyout rumors, the current price is more in line with the us$ 19.74 per share price it closed at on March 8, 2007.
John Knott, executive vice president of the Global Gaming Group for CB Richard Ellis, said land values on the Strip are on hold while the credit markets wait to see what happens with some of the land holdings that changed hands last year. "There is potentially more product out there than there was four months ago," he said. "The impact is it’s more challenging for the Riviera to get us$ 30 million per acre which you could have argued four months ago was the value. Today, it’s clearly not the value."
Knott cited a Strip pipeline of undeveloped holdings, including 16.1 hectares owned jointly by MGM Mirage and Kerzner Holdings International, 14.1 hectares of the former New Frontier site owned by Elad Group, 10.9 hectares of the former Wet ’n Wild site slated for Crown Las Vegas as well as uncertainty surrounding the Tropicana.
"If you were going to do a deal today, you would have to scrutinize the buyer’s ability to get to the goal line," Knott said. "Anybody who is going to require financing is going to have difficulty arranging financing right now."