Vail Resorts Inc (MTN.N) said it would buy Whistler Blackcomb Holdings Inc (WB.TO), operator of the Canadian ski resort that was a venue for the 2010 Olympic Winter Games, for about $1.39 billion (US$1.06 billion).
The deal will help bring more stability to Vail’s weather-dependent business and boost its summer revenue.
It will also help Whistler draw more tourists with Vail’s season pass, which allows pass-holders ski at Vail’s resorts in the United States and Australia.
“In summer, Whistler is absolutely a leader in North America and we feel that adding that to Vail Resorts certainly helps our summer revenue and profitability,” Vail Chief Executive Rob Katz told Reuters.
Katz said the acquisition will augment Vail’s season pass program, which has about 500,000 holders and has been growing by about 15 percent annually in the last seven to eight years.
The $36 per share cash-and-stock offer represents a premium of about 43 percent to Whistler Blackcomb’s Friday close.
Whistler’s shares jumped 47.6 percent to an all-time high of $37.10, while Vail’s shares rose 9.7 percent to a record high of US$157.95.
Vail will pay about $676 million in cash and $715 million in stock. It is planning to use a term loan, its credit facility and cash-on-hand to fund the acquisition.
Vail’s offer was unsolicited, Whistler CEO Dave Brownlie said on a conference call, adding that there were no other bidders.
Brownlie said the deal would help Whistler’s growth plans, including a project that is aimed at insulating the company’s year-round resort in British Columbia from daily changes in weather. The project includes an indoor adventure center and a six-star luxury hotel.
Whistler Blackcomb operates a year-round mountain resort in British Columbia, which is open for skiing from November through May of each year.
A number of lifts, which take people up the hill, remain open from May through October for summer activities including sightseeing, hiking, glacier skiing and mountain biking.
Whistler and Blackcomb are two side-by-side mountains connected by cable lift. More than 200 trails, 14 alpine bowls and three glaciers are spread across the mountains.
More than 2 million skiers visited Whistler Blackcomb’s resort in the year ended March 31. The resort had 2.7 million visitors in all.
The company was formed in 1997 through the merger of Whistler and Blackcomb mountain resorts.
The deal, expected to close in fall 2016, comes seven months after Vail bought the Wilmot mountain ski area in Wisconsin.
Greenhill & Co is the financial adviser to Whistler Blackcomb. Osler, Hoskin & Harcourt LLP is the legal counsel to the company, and Farris, Vaughan, Wills & Murphy LLP is the legal counsel to Whistler Blackcomb’s special committee of the board.
Stikeman Elliott LLP and Gibson Dunn & Crutcher LLP are the legal counsel to Vail.
Update: Whistler Blackcomb is a portfolio company of KSL Capital Partners, a U.S. private equity firm focused on travel and leisure investments.
KSL acquired a 24 percent stake in the ski resort operator in December 2012. The seller in the deal was Intrawest ULC.
(Reporting by Arunima Banerjee and Amrutha Gayathri in Bengaluru; Editing by Maju Samuel)
(This story has been edited by Kirk Falconer, editor of PE Hub Canada)
Photo courtesy of Reuters/Andy Clark