Intrawest to go private in a $1.8 billion transaction
TRUCKEE – Intrawest, a minority owner and manager of the Village at Squaw Valley and other ski real estate holdings across the nation, has agreed to sell to a private investment company, Fortress Investment Group LLC, for $1.8 billion. The deal must be approved by Intrawest’s 1,000 shareholders. The acquisition is the biggest-ever buyout of a publicly traded resort operator, and the third largest private equity acquisition of a Canadian company.
Fortress Investment Group LLC will pay $1.81 billion in cash for Intrawest, as well as assume nearly $1 billion in debt from the company.
Intrawest, well known across the nation for developing the villages at Whistler Blackcomb in British Columbia and Mammoth Mountain in California, among others, also owns luxury travel company Abercrombie and Kent and the largest heli-skiing company in the world, according to the company’s Web site.
But the company began to make major changes over the last two years. In early 2005, Intrawest announced it was selling 80 percent of its villages to CNL Income Properties of Maryland.
Intrawest still manages the villages under the agreement with CNL.
Gagnier said that Intrawest’s latest decision reflects a move toward the “experiential travel industry” by the resort company.
Herb Manning, owner of the Granite Chief retail shop in the Village at Squaw Valley, said the purchase by CNL Income properties had no effect on his business.
“I think that was just about moving money around,” he said.
Manning said he deals with the same leasing agents and management people in the village, and expects that to remain the same despite the buy-out.
“I don’t think much is going to change,” he said.
An analyst with Intrawest’s largest holder, Pirate Capital LLC, called the $35 per share bid “a great price,” and said the hedge fund would support the deal. Pirate began buying shares about 18 months ago and had pressed Intrawest to boost returns.
“With the real estate headwinds and consumer sentiment wavering, it’s hard for public shareholders to value the company as it should be valued,” Pirate’s Stephanie Tran said, adding that investors had not fully valued the company’s real estate holdings.
“It’s obvious it ought to be a private company,” she said.
The Intrawest deal also represents the latest acquisition by private equity firms, which have been actively snapping up a variety of publicly traded firms in recent months.
“We set out about a year ago to start the process for figuring out what’s the best financial structure for the company to achieve maximum shareholder value,” Joe Houssian, Intrawest’s chairman, president and chief executive, said in a telephone interview.
He said the company had received about 100 inquiries and dealt “with 15 of them in some level” before deciding to accept the Fortress bid “as the best transaction to generate shareholder value.”
Among other properties, Intrawest owns the Sandestin Golf and Beach Resort in Florida, and Club Intrawest, a private resort club network in North America. It also operates Winter Park ski resort in Colorado and owns ski properties in West Virginia and Vermont.
Fortress sees the company’s diverse leisure properties as growth opportunities and will pursue new growth initiatives, he said.
“I think the company’s growth strategy and Fortress’ view of the company are very much in alignment.”
The acquisition requires the approval of regulators and two-thirds of votes cast by Intrawest shareholders. The deal has the backing of Intrawest’s board of directors and is expected to close in October, pending receipt of shareholder and court approval.
Houssian, who founded Intrawest in 1976, declined to comment on his role at the company ahead of a shareholder vote scheduled for October.
Talks about the future of Intrawest’s 24,800 employees once the company goes private are expected to start soon, Houssian said.
Fortress has previously invested in Brookdale Living Communities Inc., an operator of senior independent living facilities, and Alterra Healthcare Corp., which has filed for bankruptcy protection.
The company manages about $23 billion in capital.