In an unexpected move, Hollywood producer Merv Griffin on Thursday offered $250 million for the stock of casino operator Resorts International. The $35-a-share bid came on the eve of a court hearing that is crucial to Resorts Chairman Donald J. Trump's $22-a-share plan to take the company private.
In response, Trump quickly declared that he would not sell his controlling Class B stock, which was one of several conditions that Griffin put on his bid.
However, Griffin's offer, which was made through his wholly owned Griffin Co., sent the price of Resorts Class A stock up $3.375 a share on the American Stock Exchange. The stock closed at $25.25 on heavy trading volume of 630,300 shares.
Later, Resorts' special committee of outside directors refused to withdraw its recommendation that shareholders accept Trump's $22-a-share offer. The company said the decision was based in part on Trump's rejection of Griffin conditions requiring his cooperation.
Griffin, who starred for 23 years as a television talk show host and made hundreds of millions of dollars from his "Wheel of Fortune" and "Jeopardy" television game shows, accused the Resorts committee of breaching its fiduciary duty to public shareholders by rejecting a better offer. He said he may sue.
Meanwhile, Trump's lawyer questioned the motives behind the 11th-hour proposal.
The acrimonious exchanges set the stage for a hearing today in which a Delaware judge is to decide whether to approve the settlements of lawsuits by Resorts stockholders against Trump and the company. The settlements were announced Feb. 1, when Trump raised his bid to $22 from $15 a share for the Resorts shares he does not already own.
One condition of the Griffin offer is that the court reject the settlements. Trump, who owns 88% of the combined voting power of the Class A and B stock, has conditioned his $22-a-share offer on the court's approval of the settlements.
Another Griffin condition, also rejected by Trump, was that he give up his lucrative contract to manage Resorts' casinos in Atlantic City, N.J., and the Bahamas.
In his written proposal to the Resorts board Thursday, Griffin noted that he has recently purchased the Beverly Hilton Hotel in Los Angeles for more than $100 million and has been seeking additional hotel and entertainment acquisitions.
He explained that the possibility that an offer for Resorts could be made was "brought to our attention" by F. V. Scutti, a major holder of Resorts Class A stock.
Scutti, who owns more than 5% of the class, had filed objections Monday to Trump's bid and to the proposed settlement of the stockholder suits with the Delaware court.
Trump Firm on Bid
A New York lawyer for Trump, Jack H. Nusbaum, called Griffin's offer "illusory" and said it was made to manipulate Resorts' stock price and to "throw a monkey wrench" into today's court hearing.
Saying that a letter from Griffin to Trump indicated that Griffin bought an option to buy half of Scutti's shares, Nusbaum contended that the offer was arranged by Scutti to force Trump to make a higher bid.
Nusbaum said Trump has offered a "full and fair" price to the Resorts shareholders and will not raise it further. If the court rejects the settlements, he said, Trump will "go back to owning the stock he owns and running Resorts."
In moving to take the firm private, Trump had said that was the only way he would commit his resources to completing the company's massive Taj Mahal casino on the Atlantic City Boardwalk. The lavish project, partly completed before Trump bought control last year, has an estimated price tag of $930 million.
On Feb. 24, New Jersey gambling regulators renewed Resorts' license to operate but only after raising questions about Trump's reasons and methods in seeking to take the company private.