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TORONTO - Saudi Prince Alwaleed bin Talal and an investment firm owned by Microsoft Chairman Bill Gates launched an offer for Four Seasons Hotels on Monday that proposes to take the Canadian luxury hotelier private.
News of the bid from two of the world's richest men sent the company's stock up more than 29 per cent, slightly topping the bid price of US$82 ($122) a share in cash.
The suitors for Four Seasons include Prince Alwaleed's Kingdom Hotels International, Gates' Cascade Investment LLC and Four Seasons' founder Isadore Sharp and his family holding company, Triples Holdings.
Four Seasons said the deal values the company at US$3.7 billion. The valuation takes into account 41.1 million in outstanding limited and variable multiple voting shares, a US$288 million payout to Sharp and net debt.
The group's bid represents a 28.4-per cent premium over Four Seasons' closing share price of US$63.87 in New York on Friday.
The stock gained US$18.63 to end at US$82.50 on Monday in New York, and surged C$20.95 to close at C$93.06 in Toronto.
Several analysts said a counterbid is unlikely.
"These are good quality investors, and Sharp would not sell to fast money private equity firms, so I don't see another player coming in the picture," said Jacques Kavafian, an analyst at Research Capital.
Prince Alwaleed already has a 23-per cent stake in Four Seasons, according to Reuters Knowledge, while Cascade said in a filing on Monday that it owns 8.2 per cent of the company.
This is the Saudi billionaire's second foray into the Canadian hotel segment this year. In January, his Kingdom Hotels joined forces with a U.S investment group to buy another luxury chain, Fairmont Hotels & Resorts, for US$3.9 billion.
Deutsche Bank Securities analyst Bill Lerner estimated that the US$82-a-share offer values Four Seasons at a "curiously strong" ratio of 44.4 times expected fiscal 2007 earnings per share and 31.9 times expected 2007 EV/EBITDA.
Lerner said the deal could be part of a broader strategy to blend the global marketing and distribution of the Four Seasons and Fairmont brands.
Sharp, 75, who will remain chairman and chief executive of Four Seasons, said the proposed deal would change little at the company, which manages about 68 hotels around the world, beyond its ownership.
The deal was driven by a desire to find long-term partners and oversee the ownership transition while still head of the company he founded, Sharp said on a conference call.
Sharp's Triples Holdings now controls about 65 per cent of the voting rights in Four Seasons through multiple-voting shares, a spokeswoman said. If the deal goes through, Triples would have a 10-per cent stake of the hotel chain, with the remaining shares split equally between Kingdom and Cascade.
Sharp would also gain US$288 million from the bid, relating to a long-term incentive agreement created in 1989.
The offer is subject to shareholder and regulatory approval and the company's board has established a special committee of independent directors to consider it.
It would be surprising if the board of Four Seasons rejects the offer because of the high premium and longstanding relationship between the company, Prince Alwaleed and Gates, who both own several Four Seasons hotels, UBS analyst William Truelove said in a note to clients.
- REUTERS
