Vail Resorts Inc. is buying North America’s and Canada’s largest ski area, Whistler Blackcomb Holdings, for CAD$1.4 billion ($1.06 billion).
Under the transaction, Vail Resorts would acquire 100 percent of the stock of Whistler Blackcomb, whose shareholders would receive CAD$17.50 per share in cash and 0.0975 shares of Vail Resorts common stock, for consideration having a total value of CAD$36 per share, based on the August 5 closing prices.
“Combining Whistler Blackcomb with Vail Resorts’ portfolio of outstanding resorts provides Whistler Blackcomb with increased financial strength, marketing exposure, guest relationships and broadens the geographic diversity of our company with resorts across the United States, as well as in Australia and Canada. This relationship will bring greater resources to support our current operations and our ambitious growth plans, including the Renaissance project, the most exciting and transformative investment in Whistler Blackcomb’s history,” said Dave Brownlie, Whistler Blackcomb’s chief executive officer.
“Whistler Blackcomb is one of the most iconic mountain resorts in the world with an incredible history, passionate employees and a strong community,” said Rob Katz, chairman and chief executive officer of Vail Resorts. “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. We are delighted to add such a renowned resort to Vail Resorts and look forward to expanding our relationships in the Sea-to-Sky community, British Columbia and Canada.”
Brownlie added, “As the number one ranked and most visited resort in North America, Whistler Blackcomb has enjoyed tremendous success by delivering an exceptional mountain experience for our passionate and loyal guests — both locally and from around the world. That’s going to continue as we work with our new colleagues at Vail Resorts as well as our employees, local businesses, community and government stakeholders to make Whistler Blackcomb better than ever. We will also continue our discussions with the Squamish and Lil’wat First Nations, on whose traditional lands we operate, regarding a business partnership that will benefit our communities, our province and our company for decades to come. Our board of directors has also been monitoring the unique challenges facing the broader ski industry due to the unpredictability of year-to-year regional weather patterns. Whistler Blackcomb, with its unprecedented acreage of high alpine terrain and glacier bowls, is well positioned, but by no means immune to these challenges. Partnering with the geographically diversified Vail Resorts and extending its successful Epic Pass products to Whistler Blackcomb are customer-focused ways of securing the long-term future of our resort, our industry and our community.”
Whistler Blackcomb will nominate one member of its board to the Vail Resorts board of directors, and Dave Brownlie will continue leading Whistler Blackcomb as the resort’s chief operating officer and will become a member of the senior leadership team of Vail Resorts’ mountain division.
Vail Resorts’ officials said they are committed to investing in Whistler Blackcomb, including:
- Support for Master Development Agreements with local First Nations. “Vail Resorts recognizes that Whistler Blackcomb is in the Squamish and Lil’wat First Nations’ traditional territories and will support and continue the ongoing efforts to negotiate the renewal of Whistler Blackcomb’s Master Development Agreements with significant long-term benefits to the Squamish and Lil’wat First Nations, the Province of British Columbia and the Resort Municipality of Whistler,” officials said.
- Local leadership. “Whistler Blackcomb will continue to have principally local Canadian leadership, with critical day-to-day mountain operations residing at the resort, including ongoing primary responsibility for relationships with the local community, governments and First Nations.”
- Maintain local employment. “Vail Resorts intends to retain the vast majority of Whistler Blackcomb employees, while only impacting a few select areas where there may be duplication in corporate functions. This transaction will not change the day-to-day operations at the resort, community engagement or the input of local management in shaping Whistler Blackcomb’s future.”
- Investment in the resort experience. “Vail Resorts will invest substantially in Whistler Blackcomb’s mountain infrastructure and growth plans, including continuing to build community and stakeholder support for the recently announced Renaissance project, a transformational investment which will diversify the local tourism economy, provide new four-season, weather-independent activities and elevate Whistler Blackcomb’s core skiing, mountain biking and sightseeing experiences for decades to come.”
- Common values on community and environmental sustainability. “Consistent with Vail Resorts’ core values, Whistler Blackcomb will continue its community involvement through the Whistler Blackcomb Foundation as well as its significant environmental and sustainability commitments. Vail Resorts also will support Whistler Blackcomb’s continued engagement with organizations such as Tourism Whistler, Destination BC, Canada West Ski Areas Association and the Whistler Chamber of Commerce.”
Katz continued, “We look forward to working with Dave and the entire Whistler Blackcomb team as we support their efforts to continue the great progress that has made Whistler Blackcomb the world-renowned resort it is today. We are excited about what this transaction means for guests and look forward to providing access to the resort for our season pass holders around the world.”
For the full 2016-17 winter season, Whistler Blackcomb will continue to honor the resort’s existing season pass products, and officials said Vail Resorts looks forward to integrating Whistler Blackcomb into its Epic Season Pass and other season pass products for the 2017-18 winter season.
Additional Transaction Details
The transaction has been unanimously approved by the Whistler Blackcomb board of directors, and shareholders representing 25 percent of Whistler Blackcomb’s common shares have entered into voting support agreements in connection with the transaction. The transaction has also been unanimously approved by the Vail Resorts board of directors.
The aggregate cash component of the offer is estimated to be CAD$676 million ($513 million), which Vail Resorts intends to finance through an expansion of its existing credit facility. The aggregate stock component of the offer is estimated to be CAD$715 million ($543 million), based on closing stock prices and exchange rates as of August 5, 2016.
For the 12 months ended March 31, 2016, Whistler Blackcomb had adjusted EBITDA of CAD$123 million, or $90 million. Vail Resorts believes if the transaction closes before December 31, 2016, the estimated incremental resort reported EBITDA from the acquisition in its fiscal 2018 would be approximately $129 million, or CAD$170 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.
Whistler Blackcomb’s 25-year relationship with Nippon Cable will be unaffected, and will continue after the closing of the transaction.
Greenhill & Co. is serving as financial advisor to Whistler Blackcomb, and Stikeman Elliott LLP and Gibson Dunn & Crutcher LLP are serving as legal counsel to Vail Resorts. Osler, Hoskin & Harcourt LLP is serving as legal counsel to Whistler Blackcomb, and Farris, Vaughan, Wills & Murphy LLP is serving as legal counsel to Whistler Blackcomb’s special committee of the board of directors.