http://unofficialnetworks.com/2016/08/vail-resorts-buys-whistler-blackcomb-for-1-39-billion
Vail has bought Whistler for $1.39 Billion.
An earthquake in the ski world. 9.0 on the Richter scale:-)
I guess hat I'll be heading north of the border to ski for the first time in quite a while. Ahhh, the Epic Pass just keeps getting better and better.
Interesting view of the transaction from Summit County, Co.
http://www.summitdaily.com/News/23329710-113/vail-resorts-whistler-mergers-impact-on-summit-unknown-for?utm_source=presslaff&utm_medium=newsletter&utm_campaign=sd-local-news-flash
If only Vail would now buy 7 Springs/Hidden Valley/ Laurel Mountain. It would add the Pittsburgh market to their feeder system like they have done with Afton Alps adding Minneapolis/St.Paul, Mt. Brighton bringing Detroit, and Wilmot bringing Chicago/Milwaukee
I have to wonder how Vail plans to pay for the purchase? As of the end of April (the last quarter reported) Vail had a whopping $74 million in cash in the Bank and $615 million in long term debt. So it appears that Vail plans to MORE THAN TRIPLE it's long term debt. I guess the other option would be to issue another million shares of MTN stock - dilluting the heck out of the current 36 million shares.
I've gotta think that they plan to sell some of Vail's less strategtic properties to lessen the debt load. Keystone comes to mind. Vail hasn't invested nearly as much in Keystone as in Vail , Breck, Beaver Creek, Park City etc, etc. It has been kind of the bastard of Vail's holdings - even though it is the 5th most visited ski area in North America. It would not surprise me ...
Debt/equity ratio currently at 64 goes to hell with another 1.39 billion of debt. I personally think that Vail has bitten off more than it can chew. It has been 8 years since the last recession, History says that one is due. If so, Vail Resorts could be teetering on the edge by the time the next recession ends. If that happens, somebody will buy Whistler for a whole lot less than $1.39 billion.
In this Vancouver article, says that Vail does not plan to increase debt to purchase W-B.
http://vancouversun.com/business/local-business/vail-resorts-makes-1-4-billion-takeover-offer-for-whistler-blackcomb
"Both Vail and Whistler Blackcomb are publicly-traded companies. Under the scheme Whistler Blackcomb shareholders are being offered $17.50 per share in cash and 0.0975 shares of Vail Resorts common stock for each of their shares, for a total of $676 million in cash and Vail stock worth about $715 million. When the deal closes this fall, Whistler Blackcomb shareholders will own approximately 10 per cent of Vail’s shares"
"But Katz said Vail’s investment in Whistler Blackcomb will not be financed by debt. He noted Whistler Blackcomb is already a public company with many U.S.-based shareholders."
According to another article: "Vail Resorts will pay about $513 million in cash and about $543 million in stock in the deal." Since Vail bought Wilmot and is spending $13 million on major renovations this summer, what Vail does makes news in Milwaukee now.
http://www.bizjournals.com/milwaukee/news/2016/08/08/vail-resorts-owner-of-wilmot-mountain-ski-area.html
A couple other viewpoints on the change. These articles have a positive spin.
Park City
http://www.parkrecord.com/news/business/vail-resorts-agrees-to-buy-whistler-blackcomb/
Vancouver
http://www.theprovince.com/business/local+business/whistler+blackcomb+purchase+look+vail+resorts+handled/12114728/story.html
The problem with that statement is that Vail doesn't have $513 million in cash. As of the end of the last financial quarter it had $74 million. So how does Vail raise over $400 million in cash?. Asset sales come to mind. Anybody have any other ideas?
From the Denver Business Journal: "The Colorado company (Vail) said that it will either assume or refinance about U.S. $132 million in debt held by Whistler Blackcomb". So the MTN debt load will increase as a result of the acquisition.
marzNC wrote:
According to another article: "Vail Resorts will pay about $513 million in cash and about $543 million in stock in the deal."
msprings wrote:
If only Vail would now buy 7 Springs/Hidden Valley/ Laurel Mountain. It would add the Pittsburgh market to their feeder system like they have done with Afton Alps adding Minneapolis/St.Paul, Mt. Brighton bringing Detroit, and Wilmot bringing Chicago/Milwaukee
Timberline would be a heckava lot cheaper and the DC market is much larger than the 'burgh
I'd be willing to bet Vail Resorts will pay for the deal through issuing new stock. With the stock trading at an all time high, the timing has never been better to raise capital thourgh equity.
msprings wrote:
I'd be willing to bet Vail Resorts will pay for the deal through issuing new stock. With the stock trading at an all time high, the timing has never been better to raise capital thourgh equity.
Well, the pretty detailed announcement says not. From the Vail Daily " The announced deal states that Whistler Blackcomb shareholders will receive a cash payment of C$17.50 per share, and will receive .0975 shares of Vail Resorts stock per share. The total payment adds up to C$36 per share ”” $27.36 per share in U.S. currency."
So again the question is "How do they pay over $500US million cash, when they only have $74 million in cash in the bank?"
Methinks that MTN overpaid for WB.to. WB.to stock price before the announcement about $25C. Offer $36C -- results in a premium of about 44%
Actually, Vail at one time was a suitor for 7S but the Dupre family could not agree on the deal, hence we got Nutting. Note also that from my experience, depending whether or not your north or south of DC, 7S/HV/LM are at least a half hour closer drive time than Timberline.
