Say what you like about Paul Kanavos and his confederates at Riv Acquisition — Robert Sillerman, Brett Torino and Barry Sternlicht — they don't have any "quit" in them. Yes, they've had two takeover attempts of Riviera Holdings rebuffed, once by the shareholders and once by the current board. But rather than take "no" for an answer, they've devised a creative stratagem.
At the May 15 Riviera board meeting, Kanavos & Co. plan to put their own slate of candidates forward. Can Riv Acquisition succeed in getting a majority vote from the same shareholders who drop-kicked its $17-a-share offer last year? I have no idea but it will be interesting to watch Sternlicht, Kanavos, etc. try … and their slate of candidates isn't a bunch of Joe Schmoes, either. It includes University of Nevada Regent Thalia Dondero, Cash Systems CEO Michael Rumbolz and a former COO of Caesars Palace, along with at least one obvious patsy.
Should the aforesaid slate of candidates get voted in, it doesn't take a genius to foresee what will almost inevitably follow. Riv Acquisition will put together yet another offer; after token scrutiny, the new board will rubber-stamp it; then Riv Acquisition will use its disputed "lock-up" agreement with the Ghermezian family to leverage the shareholder vote to its advantage. Give these guys an "A" for both ingenuity and determination. They've clearly taken to heart the old advantage of "If at first you don't succeed …"
What's an acre on the North Strip worth? That's the question at the heart of the power struggle with Riviera Holdings. With their stock trading at almost $30 a share, holders of RIV are in a position to scoff at previous Sillerman, Torino et. al. tenders for the company. And yet … recent transactions on the North Strip would appear to undermine their bargaining position.
Ever since Boyd Gaming put a $15 million/acre price tag on its Stardust land, there hasn't been a great deal of movement outside that range. Yeah, you''ve got Phil Ruffin taking — and then un-taking — $34.8 million an acre for the New [sic] Frontier … or so he told his fellow Kansans. But MGM Mirage just rolled up a massive chunk of North Strip real estate for little more than $17 million per acre. And, yeah, Gary Tharaldson offloaded his Westward Ho site to Boyd (by way of Harrah's) for $18 million or so per acre, consummating what local resort broker David Atwell called "the flip of the century." But … the mystery owners of the indispensable, intervening parcel betwixt the Stardust and the W. Ho parted with it for a measly $9 million/acre. Who says you can't find a bargain on the Strip anymore?
In other words, what this tells us is … nothing. Ruffin is too much of a wild card to serve as a useful barometer of Strip values and the people who owned that parking lot between the Stardust and the Ho got taken to the cleaners by Harrah's. Which leaves us with our same old $15 million-$18 million spectrum of value per acre on the North Strip. If RIV shareholders hope to realize the $22 million per acre or more that management once dangled in front of them, they'll need a buyer who's either not very Strip savvy or who's very desperate … but there still seem to be a few of those around.
