Four Seasons Receives $3.7 Billion Offer

Monday November 6, 4:41 pm ET
By Beth Duff-Brown, Associated Press Writer 
Four Seasons Receives $3.7 Billion Offer From Investors Including Saudi Prince, Bill Gates

TORONTO (AP) — Companies owned by Bill Gates and a Saudi prince announced Monday they had joined with the founder and CEO of Canadian hotel giant Four Seasons in a bid to take the company private for $3.7 billion in cash.

The offer, equal to $82 per share, was made by Four Seasons chairman and CEO Isadore Sharp, along with Sharp’s family holding company, as well as Kingdom Hotels International and Gates’ Cascade Investment LLC. Sharp founded the Four Seasons in 1960 with one small hotel in downtown Toronto.The offer represents a 28.4 percent premium over the company’s Friday closing price of $63.87. The stock jumped $18.63, or 29 percent a share, to close at $82.50 in trading Monday on the New York Stock Exchange, a signal that the final price paid for the luxury chain may be even higher than the current offer.

Kingdom Hotels is owned by a trust created by Prince Alwaleed Bin Talal Alsaud, believed to be the wealthiest businessman in the Muslim world. A nephew of the late King Fahd, Prince Alwaleed is worth more than $20 billion, according to Forbes magazine.

Four Seasons, which is based in Toronto, said it has set up a special committee of independent directors to consider the offer and make recommendations.

“This transaction is intended to ensure the legacy of the Four Seasons,” Sharp told reporters in a teleconference. “This proposal achieves all my objectives for Four Seasons and my family, and is the only one that I am prepared to pursue.”

Almost 21 percent of the limited voting shares are held by the Kingdom group. Joining them in the bid to buy out other stockholders is Cascade, an entity owned by Gates, co-founder of the world’s largest software company. It owns about 8 percent of Four Seasons shares.

Calls to Microsoft for comment were not returned; as well as calls to the Ontario Teachers’ Pension Plan, which owns 44,211 shares.

Another large shareholder behind Kingdom is Bank of America’s Marsico Capital Management, based in Denver. A spokeswoman for the company, which owns 6 million shares, or 16.4 percent, said they do not comment on potential transactions.

Sharp and Triples Holdings Limited agreed Kingdom and Cascade would acquire the limited voting shares of the Four Seasons. Triples, which is the Sharp family’s holding company, would keep its Four Seasons investment.

If the transaction is completed, Triples would hold about 10 percent of Four Seasons’ shares through a separate class of special voting shares. The balance of the stock would be split equally between Kingdom and Cascade.

Sharp would remain Four Seasons chairman and chief executive, continuing to direct all aspects of day-to-day operations and strategic direction of the company, which would remain headquartered in Toronto.

If the deal closes, Sharp would receive $288 million in proceeds related to a long-term incentive agreement.

Gates and Prince Alwaleed “share my long-term vision and commitment to this company,” Sharp said, and the deal provides a significant premium to minority shareholders as well as “continuity and stability for our hotel owners, customers and employees for the long term.”

The transaction is subject to shareholder and regulatory approvals.

David W. Anders, research analyst for Merrill Lynch in New York, said he believes the deal would go through.

“Given that all the parties have already been involved in long-term shareholders of the company and own many of the Four Season hotels that have been operated under long-term management agreements, we see this transaction as highly likely,” he said in a statement.

The hotel chain currently has 71 hotels in 31 countries and more than 25 properties under development.

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