Thursday, April 3, 2003 | 11:13 a.m.
An Italian investor who was rebuffed in his efforts to purchase the Desert Inn before Steve Wynn snapped up the property a few years ago is making another unsolicited offer, this time for the owner of the Riviera hotel-casino on the Las Vegas Strip.
The offer marks the latest move in a six-year effort by investor Fabrizio Boccardi to buy or develop a resort on the Las Vegas Strip. His $200 million cash offer for the Desert Inn in 2000 was rejected as inadequate and Wynn bought it for $270 million.
And Boccardi's expressed interest in buying land near Polo Towers or the New Frontier for a resort has never come to fruition.
Boccardi's $30 million bid for Riviera Holdings Corp., which would also include the assumption of $216 million in debt -- was rebuffed in initial discussions over the past two weeks, he told the Wall Street Journal for an article published today.
Boccardi is also willing to buy the Riviera casino alone for $135 million in cash, he told the Journal.
Riviera stock soared 47 percent on the news this morning, trading at $5.79, up $1.84.
Riveria Chief Financial Officer Duane Krohn refused to confirm or deny the bid, saying that the company "receives lots of offers that never come to fruition."
As a public company, the Riviera has a duty to shareholders to examine every deal, however, he said.
The Riviera, the epitome of luxury when it opened in 1955, has long been overshadowed by high-end resorts that have opened in recent years. But the property has garnered more attention from investors in recent years because of talk that Wynn's Le Reve megaresort -- scheduled to open in 2005 at the Desert Inn site -- will spark a revitalization of the north end of the Strip.
"It makes for an interesting target acquisition," said Phil Flaherty, former president of the Desert Inn and chief gaming officer for Barrick Gaming Corp., a startup company that is pursuing a deal to purchase four downtown casinos for $82 million. "It does have a good address, it does have a good history and it does have a good people flow. And it does need refurbishing. But it would have to go for a premium."
Flaherty said even an attractive deal appears unlikely to be accepted in the current environment given that the Riviera -- for all its debt and low stock price -- remains on solid ground amid troubled economic times and is steered by several large stakeholders, both insiders and outside speculators like Donald Trump, who could block the deal or press for a better price.
The casino licensing process for Boccardi would also be a challenge and could take up to a year and a half or more, as it has for the few other foreign investors who have entered one of the most highly regulated industries in the world, he said.
"Now is the best time to be a buyer. Historically business is down ... but this isn't a slam dunk," he said.
Boccardi's bid is backed by several investors including the French casino operator Groupe Partouche, the Journal said.
The move comes a few months after Trump bought a 10 percent stake in Riviera Holdings, triggering a Nevada gaming license application required of major shareholders as well as key employees.
Some observers have interpreted Trump's investment as a move to eventually take control of the company, using his licensing procedure to speed the process along. He has maintained that his stake is for personal reasons.
Trump declined to comment on Boccardi's offer or his future plans today other than to say the Riviera is a "wonderful property and a wonderful asset."
In an interview with the Sun in 1998, Boccardi noted that he was an "underdog in a heavily competitive field."
"By aligning ourselves with Partouche and other investors, our company is leveraging some of the best in the industry. We do not intend to simply build another casino or entertainment complex but to develop a product and brand that will set a new industry standard and take Las Vegas to a new level."
The offer disclosed today generated mixed comments from Las Vegas observers.
"As far as I'm concerned, he's a flake," said Stephen Cloobeck, president of Diamond Resorts International, which owns the Polo Towers and other timeshare developments in Las Vegas.
Cloobeck said Boccardi never contacted him about development plans even after the investor's interest in developing near Polo Towers made the news.
Others say the deal, which looks attractive to bond-holders, shouldn't be ignored.
"I hear it's very substantial," said an executive who declined to be named.
"Considering the stock has traded in the $5 range for a period of time, the offer on the table seems to be a nice premium," added Ray Cheesman, a bond analyst with Jefferies & Co.