Friday, August 11, 2006

Intrawest's New Owners

by Osman Parvez



Resort operator Intrawest announced a buy-out this morning. The company, which owns Copper Mountain and Winter Park, among other resorts was purchased for $2.8BN by Fortress Investment.

"Over the past five months, we have thoroughly analyzed the financial and strategic options for the company and believe that the value inherent in this transaction is in the best interests of all of our shareholders," said Joe Houssian, Intrawest's Chairman and CEO.

As real estate in resort and second home markets continues to transition, I'd expect to see more deals like this one. Also, look to Fortress to begin selling off some non core assets of Intrawest.

Note: Other sources tag the purchase price at $1.8Bn.






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4 comments:

  1. Other than the specialty retail stores what isn't core? Man, the exposure to resort houisng in Mammoth alone gives me chills. They've paid a huge premium at a time where they'll have little pricing authority for their products.

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  2. I haven't spent much time analyzing their business, but a quick glance of their website suggests several ways to chop it up.

    Resort operations seems a different business than developing real estate around the resort.

    A split could also occur along the type of destination market. Are ski resorts the same as golf club communities?

    The travel/adventure planning stuff is a third offshoot. i.e., how does Abercrombie and Kent fit in with operating a resort?

    Buy outs like this happen because the sum of the parts are worth more than the whole. Over the next 5 to 7 years, Fortress Investment will chop off and sell assets along lines of buiness. Then maybe they'll possibly IPO to exit.

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  3. I'll try to answer a few questions without sounding sotty or preachy. Sure, they'll want to chop it up. The buying spree never made sense. I'd go so far as to claim the buying spree was supposed to depress the stock price so that the breakup could be arranged.

    The operation of destinations and RE developemnt interests are, and I'm embarrased to use the word, synergystic. Slap me now and let's move on. At Mammoth the investment in the resort allowed Intrawest to charge a superpremium for their developments. It also allowed them in Mammoth to run roughshod over any form of opposition. A friend was a benificiary. The gondola is a block away thus making his home more valuable while the people who have the gondola running through (yes) their backyards at second story window level were shouted down. Their house went from $240k to $2.4m in 10 years. Fortress expects to reveal similar hidden value in their Mammoth holdings. Bagholders in my opinion. Whatever bank signed off on this deal is on my watch list.

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  4. A good followup to my post yesterday by Paul Kedrosky. Here's the link.

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