Kingdom Hotels is run by billionaire Saudi Prince Alwaleed bin Talal, who is global investor with a large stake in Citigroup Inc. and the nephew of Saudi Arabia's King Abdullah. Colony Capital is a private Los Angeles-based investment firm. The proposed transaction is expected to close in the second quarter of 2006, after receipt of shareholder and court approvals.

In addition to signing off on the deal and recommending approval to shareholders, the Fairmont board of directors affirmed its rejection of the $40 per share partial takeover bid of Carl Icahn, who holds a 9% stake in the company. The sale price represents a slight improvement from Friday's closing price and a 28% premium over the share price when Icahn's offer went public in November.

Kingdom and its affiliates already own 3,875,000 common shares of Fairmont, which equates to about 4.4% of Fairmont's outstanding shares. Last year, Colony Capital bought the hotel business of Raffles Holdings for $859 million. Prince Alwaleed's other hotel holdings include direct ownership interests in 25 properties and investments in Four Seasons Hotels & Resorts and Mövenpick Hotels & Resorts.