From combined dispatches
Luxury hotel operator Four Seasons Hotels Inc. said yesterday it would accept a $3.37 billion offer from its chief executive and firms owned by Bill Gates and a Saudi prince.
Under the terms of the agreement, parties including Mr. Gates’ Cascade Investment LLC, Kingdom Hotels International and Isadore Sharp, Four Seasons’ chairman and chief executive officer, will buy the Toronto company for $82 per share and take it private.
Kingdom Hotels is owned by a trust created by Saudi Prince Alwaleed Bin Talal, a nephew of the late King Fahd and one of the richest businessmen in the Middle East.
Four Seasons operates 73 hotels in 31 countries, including one in Georgetown, and has more than 25 other properties under development.
Hotel companies have become takeover targets as travel to the world’s largest cities rises while the supply of new hotel rooms lags.
“Interest in deals in the sector will continue unabated, if not increase,” said Amit Kapoor, a lodging industry analyst at Gabelli & Co. The Rye, N.Y., firm owns shares in Four Seasons. “Lodging companies will remain in the cross hairs of private equity buyers or even strategic buyers.”
When the transaction is completed, Mr. Sharp will receive a payment of $289 million related to a long-term incentive agreement approved by the company’s shareholders in 1989.
The price represents a premium of 28 percent over the company’s closing price on Nov. 3, the last trading day on the New York Stock Exchange before the announcement of the bid. Including assumed debt, the company valued the deal at $3.8 billion.
Four Seasons’ shares fell $2.52, or 3 percent, to close at $81.36.
Four Seasons hotels make up four of the top 10 properties in the world as ranked by Conde Nast Traveler. Prince Charles chose the Four Seasons Philadelphia during his recent visit to the U.S., the Philadelphia Inquirer reported. The cheapest available room last night at the Four Seasons New York in midtown Manhattan, a building designed by architect I.M. Pei, costs $815.
The company’s board of directors has approved the transaction, which is expected to close in the second quarter, subject to shareholder approval, among other conditions. Shareholders will vote on the deal in April.
“I am delighted that the board, after considering the recommendations developed by the Special Committee and its advisers, has determined to support what I believe is the best way to preserve and expand the long-term strategy, vision and core values of Four Seasons,” Mr. Sharp said yesterday.
Under an agreement Mr. Sharp made with the company in 1989, if the company were to be sold, he would receive a payment based on the sale price, plus another payment if the price per share was 25 percent higher than the weighted average trading price for the preceding six months.
That’s how his $289 million, one-time payment was calculated. Under the deal, Mr. Sharp and his family would retain a 10 percent ownership stake after the company goes private, with remaining shares split between the private equity companies owned by Mr. Gates and Prince Alwaleed.
The transaction will be implemented by way of a court-approved plan of arrangement under Ontario law.
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