Vail Resorts will pay $102 million in cash in a deal that includes about $3 million of assumed debt. However, there will be a cash adjustment at closing of as much as $6million. The total net deal is expected to be between $96 million and $99 millionwhen the deal closes in 30 to 60 days.
Heavenly's current earnings before interest, taxes and depreciation in the fiscal year ending in July is expected to be between $14.5 and $16.0 million.
The South Lake Tahoe area has a population of 20,000 and nearly 800 additional Marriott-branded fractional and quarter-share units scheduled to be completed in November.<p?Heavenly opened a $25-million gondola in the area within the past year in anticipation of the growth.
"Heavenly is considered to be among the top ski and snowboard resorts in the United States,'' says Adam M. Aron, chairman and CEO of Vail Resorts. ''It offers tremendous winter and summer growth opportunity with its proximity to major metropolitan areas and has the potential to become much more of a national destination resort. This transaction will enable Vail Resorts to significantly increase our presence in the North American ski and snowboard resort industry, as well as to geographically diversify our winter revenues.''
In addition, he says Vail is acquiring Heavenly at an attractive price, far below its inherent and potential value.
Over the next five years, Vail Resorts plans to invest approximately $25 million in on-mountain improvements, above an estimated $3 million per year in annual maintenance.
Improvements will include upgrading existing facilities, building new on-mountain restaurant facilities, upgrading and replacing lifts and snowmaking systems andenhancing the resort's environmental efforts.
"Heavenly is the most visited ski and snowboard resort in the Lake Tahoe area, says Andrew P. Daily, president of Vail Resorts. ''Given Vail Resorts' expertise in aggressively marketing and packaging our resorts and enhancing the guest experience through strategic capital investment, smart management and our commitment to quality, we believe we can grow Heavenly's skier visits in a relatively short period of time.''
Vail Resorts was advised in this transaction by Deutsche Banc Alex Brown, which also issued a fairness opinion as to the amount being paid.
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