Four Seasons Hotels Inc. said that it received a takeover offer of $3.7b. from investors including its current chief executive, Saudi Prince Alwaleed Bin Talal and Microsoft Chairman Bill Gates.
By ANGELA MOORE, STEVE GOLDSTEIN, MARKETWATCHarab gates hotel 88 298(photo credit: Kingdom Holding Company via Bloomberg)MarketWatch: In-depth global business coverage
Four Seasons Hotels Inc. said Monday that it received a takeover offer of $3.7 billion from investors including its current chief executive, Saudi Prince Alwaleed Bin Talal and Microsoft Chairman Bill Gates.
Four Seasons said the offer came from a team that includes Chairman and CEO Isadore Sharp; controlling shareholder Triples Holdings Ltd.; Kingdom Hotels, which is owned by Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud; and Cascade Investment, which is owned by Gates.
The offer of $82 a share in cash reflects a 28% premium to the stock's closing price on the New York Stock Exchange on Friday. Shares jumped 31% to $83.36 in morning trading Monday.
The deal "is the best way to preserve and expand the long-term strategy, vision and core values of Four Seasons," said Sharp in a statement. "Having given this proposal very careful consideration, this transaction, with these investors, is the only one I am prepared to pursue."
If the transaction is completed, Triples would hold about 10% of the shares of Four Seasons through a separate class of special voting shares, with the balance split between Kingdom Hotels and Cascade. The deal is subject to shareholder and regulatory approval.
Sharp would remain chairman and chief executive of Four Seasons. He also would be able to realize proceeds from an incentive plan reached in 1989 that would pay him $288 million. The company's headquarters would remain in Toronto.
The board of Four Seasons established a special committee, led by Ronald Osborne, to evaluate the offer, make recommendations to the board, and supervise the preparation of a formal valuation in connection with the proposed deal.
Kingdom Hotels has played a part in buying several chains, including Canadian-based Fairmont Hotels & Resorts.
Considering the premium, the offer would be "hard to turn down," wrote William Truelove of UBS in a note to investors. "Making this deal even more likely is that the management of the Four Seasons brand would remain in Toronto under Mr. Sharp's control. The combination of a favorable price with control looks too good to pass up..."
Bill Lerner of Deutsche Bank, however, pointed out that "these multiples are curiously strong -particularly since there is virtually no underlying real estate - and handily exceed the prior high water-mark for a going-private transaction in the hotel sector, which was set by Kingdom's acquisition of Fairmont in May.
"A going-private transaction could imply that the investor group may be planning to increase its direct investment in development opportunities (relative to [the company's] historically conservative use of its balance sheet), but our sense is that the investor group also may have non-financial interests in privatizing the company."
He added that the transaction would be the third of its kind - taking a hotel/leisure company private - that involves a Canadian firm within the past year, as it is preceded by both Fairmont and Intrawest.
The largest going-private bid currently under consideration is the $15b., or $81 a share, offer from Apollo Management and Texas Pacific Group for gambling giant Harrah's Entertainment.
MarketWatch: In-depth global business coverage
if(catID != 151){
var cont = `Take Israel home with the new Jerusalem Post Store
