Vermont Business Magazine The rumors proved true. Vail Resorts, Inc (NYSE: MTN) announced Tuesday morning that on Friday, February 17, 2017, it entered an agreement to acquire Stowe Mountain Resort from Mt Mansfield Company, Inc (MMC), a wholly owned subsidiary of American International Group, Inc (AIG), for a purchase price of $50 million, subject to certain adjustments (the deal ultimately closed for $41 million). Stowe Mountain Resort will be Vail Resorts' first mountain resort on the East Coast. Vail Resorts is acquiring all of the assets related to the mountain operations of the resort, including base area skier services (food and beverage, retail and rental, lift ticket offices and ski and snowboard school facilities) at Mount Mansfield and Spruce Peak. The deal does not include the Stowe Mountain Lodge, Stowe Mountain Club (the new facilities on the Spruce Peak side), Stowe Country Club and certain real estate owned and held for potential future development, which will be retained by MMC.
In a statement, Vail said Stowe complements the company's network of 10 world-class mountain resorts and three urban ski areas. This acquisition brings together Vail Resorts, the world's leading mountain resort operator, with AIG Global Real Estate (AIGGRE), a best-in-class real estate developer, who share a common vision for the long-term success of Stowe Mountain Resort as the premier, high-end resort for skiers and snowboarders on the East Coast.
Pass holders will be now able to ski at resorts that include Stowe, Vail, Park City and Whistler. The new owners get easy access to the Eastern cities from Montreal to Boston to New York and Philadelphia and down to Washington, DC.
"We're thrilled to add Stowe Mountain Resort to our family of world-class mountain resorts. With the investments in both mountain infrastructure and base area facilities that AIG has made over the years, Stowe Mountain Resort has become the premier, high-end resort for East Coast skiers and snowboarders. We look forward to working with AIG to continue enhancing the guest experience and to ensure the resort's long-term success," said Rob Katz, chairman and chief executive officer of Vail Resorts.
Douglas Tymins, president and chief executive officer of AIG Global Real Estate, said, "Under Vail Resorts' management, Stowe's reputation as a premier ski destination with a commitment to excellent service will continue to grow. AIGGRE is looking forward to combining Vail Resorts' tremendous mountain operations capabilities with our continued commitment to the development of the Spruce Peak community."
The deal is expected to close in the next three to four months.
Spruce Peak at Stowe Mountain Resort is the fanciest ski development in the East, more similar to Vail than any other ski resort in Vermont. AIG Global Real Estate, through MMC, will retain ownership of the majority of the Spruce Peak base area including Stowe Mountain Lodge, Stowe Mountain Club and future development rights. AIG will also continue to own the Stowe Country Club. Spruce Peak photo.
Parker Riehle, president of Ski Vermont, told VBM that this is a "win-win" for Vermont and for Vail.
"I think it's fantastic," Riehle said. "I couldn't be happier."
Riehle said he was given a heads up on the deal on Presidents Day. He said Vail is a first class ski operator who is getting access to an "iconic" Vermont resort that will enhance both the overall Vermont ski resort brand worldwide, while giving Vail access to the population centers in the East.
"Stowe is an integral part of the Vermont brand," Riehle said.
Vail brings its global marketing power to Vermont, he said. "The sky's the limits with the synergy."
Deputy Tourism Commissioner Steven Cook told VBM that, "The Vermont Department of Tourism and Marketing sees the acquisition of the Stowe Mountain Resort by Vail Resorts as a tremendous opportunity to attract new skiers and riders to experience Vermont. Vail’s reputation as a world class destination resort operator coupled with their powerful marketing and brand presence will bring Stowe to the next level and lift the brand presence of the entire State."
Riehle acknowledged that the price of the deal would have been much higher if all the Spruce Peak real estate were included. But while $50 million does not seem like a huge number for such a large and famous resort (Killington, for instance, sold to Powdr in 2007 for $85 million), he has no doubt it was a fair price.
"Both parties are tough negotiators," Riehle said. Nor was AIG in dire need to sell, he said. He said he had no negative concerns. Vail as a company that is well run and its stock price is doing well. "That's what gives everyone confidence, the success of Vail."
Jay Peak and Burke Mountain will be on the market at some point, also, and Riehle was asked what the Stowe sale might mean for the state's most northern resorts.
"I don't really know what this means for Jay and Burke," he said.
Steve Wright, President and General Manager of Jay Peak, told VBM: "I think it remains to be seen (what it means from a competitive point of view). We already price our season pass products competitively so I don’t anticipate any wild swings in either direction. I think Vail moving into New England may either activate, or more importantly reactivate, skiers and snowboarders and that can only be looked at positively in my opinion. Stowe already has a great product with a talented/seasoned management team so I think both brands will be elevated and I wish them luck."
Jay and Burke will be looking for a buyer once the federal receiver finds it reasonable to do so. Receiver Michael Goldberg, who took over Jay Peak and its sister resort Burke Mountain last spring after the EB-5 fraud case became public, said he wants to put the resorts in the best financial position possible before they're put up for sale.
Wright said he was not sure what Stowe's sale price will mean for any future Jay Peak transaction.
"As to setting the market for JP’s value, that’s for the smart folks to mull over," Wright said. "I’m sure it impacts it at some level but there are lots of factors that will ultimately play into it that don’t necessarily connect to what the latest sale has thrown as a multiple."
Wright confirmed what Riehle and others are saying about the Vermont ski season so far this year.
"We’ve set, then broken, four attendance and revenue records since 12/31. Snow makes all of us look like geniuses," Wright said.
"Jay is absolutely crushing it this season with their numbers," Riehle agreed. He was up at Burke on Presidents Day and said the new hotel, the centerpiece of the new development there, has added crucial bed base. "It's phenomenal."
"This is really the season for Burke to shine," he said.
The US Ski Team recently designated the Burke Mountain School and the Green Mountain Valley School at Sugarbush as official development sites. Riehle said Vermont's seven ski academies give the state more such facilities per capita than anywhere in the world.
Vermont, he said, has added both world class facilities and increased snowmaking capabilities in recent years. Vermont resorts in recent years have switched out 1,800 older snow guns with 3,000, high efficiency, lower energy guns, and they "make better snow."
After a record year in the 2014/15 season with 4.7 million skier visits, dismal weather last year dropped that number to 3.2 million (the 10-year average is 4.1 million, current season numbers will be released in June). But along with Jay and Burke, the entire state is doing much better than last year, though perhaps will not challenge the record, he said.
But, "So far it's trending really nicely." School vacations and the entire month of March - typically Vermont's snowiest month - is coming, he said.
Tourism generates $2.5-$3 billion a year to the Vermont economy, according to state data. Of that the winter produces over $900 million, and within that, second homeowners contribute upwards of $300 million. Riehle describes them as very loyal visitors.
With skiers and riders flooding Vermont resorts on Presidents Day weekend, Magic Mountain in Londonderry had to stop selling tickets because they were so busy. Riehle said he had never heard of that ever happening before.
Vail, meanwhile, has been on a buying spree. It bought Whistler Blackcomb in the Canadian Rockies in 2016, which expands its reach into the metro areas of Vancouver and the Northwest US. Vail also bought Park City in 2014, which expands its reach into Utah and the western side of the US Rockies.
Whistler is the largest resort in North America with 2.2 million skier vists, or about half of Vermont's total (Vermont typically ranks third among US states behind Colorado and California. Individual Vermont resorts do not release skier visits). The Whistler deal was announced last summer for $1.06 billion. In 2014, Vail bought the troubled Park City Mountain Resort, Utah's largest, from Powdr Corp for $182.5 million. Analysts at the time called that deal "a steal" for Vail.
Powdr, also based in Colorado (Copper Mountain, et al), owns Killington/Pico in Vermont. Powdr bought Killington/Pico in 2007 for $85 million. Vail apparently had been looking to buy a Vermont resort to expand into the East and in reports earlier this year had considered Killington or its southern Vermont rival Stratton.
Powdr and Vail tussled over the future of Park City in 2014, with Vail owning key assets but Powdr owning the actual resort. Powdr even threatened to close the resort before settling with Vail, which controlled part of the actual mountain.
Stowe Mountain Resort
Stowe Mountain Resort has a long history of providing outstanding hospitality and adventure for its guests and has reinforced its internationally respected brand with world-class improvements both on and off the mountain. The resort's newest facilities and improvements include the Spruce Peak Adventure Center, the new Meadows Quad on Spruce Peak, Evolution Stowe's RFID tickets, passes and gates and the new Shops at Spruce Peak.
Spruce Peak also has new high-speed lifts, new base facilities and gourmet restaurants. MMC will retain ownership of the renowned Stowe Mountain Lodge at Stowe Mountain Resort, a 312-room hotel and spa that has already been recognized as one of the greenest and most luxurious mountainside hotels in the world, and additional slopeside real estate opportunities.
The Stowe sale to Vail is subject to Vermont administrative review. At closing, the purchase price will be adjusted for certain agreed upon terms, including a reduction (or increase) in the price by the amount that the resort's EBITDA exceeds capital expenditures for the period from November 1, 2016, through closing. Stowe Mountain Resort is expected to generate incremental annual EBITDA in excess of $5 million in Vail Resorts' fiscal year ending July 31, 2018.
Operations at the resort for the remainder of the 2016-17 ski season will continue in the ordinary course as will future summer and winter seasonal hiring. Vail Resorts will be retaining the vast majority of the resort's year-round staff.
Vail Resorts said it looks forward to integrating Stowe Mountain Resort into its Epic Pass and other season pass products for the 2017-18 winter season, subject to the acquisition closing. With the Epic Pass, Vermont skiers and snowboarders will have unlimited access locally at Stowe at an attractive price as well as the best of the West at Vail, Beaver Creek, Breckenridge and Keystone in Colorado; Park City in Utah; Heavenly, Northstar and Kirkwood in Tahoe; and Whistler Blackcomb in British Columbia, Canada.
About Vail Resorts, Inc. (NYSE: MTN)
Vail Resorts, Inc, through its subsidiaries, is the leading global mountain resort operator. Vail Resorts' subsidiaries operate ten world-class mountain resorts and three urban ski areas, including Vail, Beaver Creek, Breckenridge and Keystone in Colorado; Park City in Utah; Heavenly, Northstar and Kirkwood in the Lake Tahoe area of California and Nevada; Whistler Blackcomb in British Columbia, Canada; Perisher in Australia; Wilmot Mountain in Wisconsin; Afton Alps in Minnesota and Mt. Brighton in Michigan. Vail Resorts owns and/or manages a collection of casually elegant hotels under the RockResorts brand, as well as the Grand Teton Lodge Company in Jackson Hole, Wyoming. Vail Resorts Development Company is the real estate planning and development subsidiary of Vail Resorts, Inc. Vail Resorts is a publicly held company traded on the New York Stock Exchange (NYSE: MTN). The Vail Resorts company website is www.vailresorts.com and consumer website is www.snow.com.
American International Group
American International Group, Inc (AIG) is a leading global insurance organization. Founded in 1919, today AIG member companies provide a wide range of property casualty insurance, life insurance, retirement products, and other financial services to customers in more than 80 countries and jurisdictions. Additional information about AIG can be found at www.aig.com.
AIG Global Real Estate, founded in 1987, comprises a group of international companies within AIG that invests in and actively manages approximately $18.8 billion of real estate for clients and AIG member companies in various countries. The business includes AIG Affordable Housing (representing over 102,000 multi-family units across the United States), and the investment management of Stowe Mountain Resort. More information can be found at www.aig.com/aig-global-real-estate.
SOURCE: BROOMFIELD, Colo., Feb. 21, 2017 /PRNewswire/ -- Vail Resorts, Inc. www.snow.com Very top photo courtesy Stowe Mountain Resort.