Riviera forced to reject Riv Acquisition Holdings merger proposal due to lockup, option agreement

By Lisa Kerner

Charlotte, N.C, March 29 - Riviera Holdings Corp.'s board of directors rejected on Thursday a $27.00-per-share cash merger proposal it received on March 26 from shareholder group Riv Acquisition Holdings Inc.

Riviera said it cannot consider the merger proposal because Riv Acquisition Holdings entered into a lockup and option agreement for 9.2% of Riviera's outstanding stock held by Triple Five Investco LLC and Dominion Financial LLC without prior approval by Riviera's board.

As a result, Riv Acquisition Holdings and related parties are disqualified from engaging in a merger or other combination with the Las Vegas hotel company for the three-year period specified under Nevada's Business Combination Law.

In addition, if Riv Acquisition and its affiliates buy Riviera shares "from Triple Five, Dominion Financial or anyone else without our board's prior approval, their voting rights as to those shares will be reduced to 1/100 of one vote per share, to the extent provided in our articles of incorporation," Riviera chairman and chief executive officer William L. Westerman said in a company news release.

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