Resort operator Vail Resorts Inc. (NYSE: MTN) said Monday that it had agreed to a cash and stock deal valued at C$36 per share (about $1.05 billion) to acquire Toronto-traded Whistler Blackcomb Holdings. Vail will acquire 100% of the stock of Whistler Blackcomb, shareholders of which will receive C$17.50 per share in cash and 0.0975 shares of Vail common stock, based on exchange rates as of last Friday.
The transaction has been unanimously approved by the boards of Vail and Whistler and holders of 25% of Whistler’s common stock. The cash value of the deal is $513 million (C$676 million). Whistler shareholders who are Canadian residents may choose, for tax purposes, to receive for each Whistler share an equivalent exchange ratio of shares in a Canadian subsidiary of Vail Resorts. Each whole exchangeable share will be exchangeable into one Vail Resorts share.
The transaction is expected to close in the fall of 2016 and current Whistler shareholders will own about 10% of the combined company’s common stock. Vail will also assume or refinance about $90 million in debt from Whistler’s 75% ownership share in the partnerships that operate Whistler Blackcomb.
Vail said that if the transaction closes before December 31, 2016, the estimated incremental reported EBITDA from the acquisition in its fiscal 2018 would be approximately $129 million, with the vast majority of the projected growth coming from additional revenue at both Whistler Blackcomb and its other resorts and a smaller portion of the projected growth coming from cost reductions, with additional upside from the transaction in future years.
Vail Resorts CEO Rob Katz said:
Whistler Blackcomb is one of the most iconic mountain resorts in the world with an incredible history, passionate employees and a strong community. With our combined experience and expertise, together we will build upon the guest experience at Whistler Blackcomb while preserving the unique brand and character of the resort as an iconic Canadian destination for guests around the world.
Whistler Blackcomb will nominate one member of its board to the Vail board of directors, and Dave Brownlie, Whistler’s CEO, will continue as chief operating officer of the resort and will become a member of the senior leadership team of Vail Resorts’ mountain division.
Vail’s stock traded up about 7% in the noon hour Monday at $154.09, after posting a new 52-week high earlier of $157.95. The stock’s 52-week low is $100.50 and the 12-month target price is $151.00.