Kerzner International Agrees to $3B-Plus Purchase Offer

In addition to Istithmar PJSC, the acquiring entity includes Whitehall Street Global Real Estate Limited Partnership 2005, Colony Capital LLC, Providence Equity Partners Inc. and the Related Cos., which is affiliated with one of the Kerzner's directors. Deutsche Bank Securities Inc. and Goldman Sachs Credit Partners have provided commitments to the investor group for the debt portion of the financing for the transaction. The Kerzners and Istithmar, which together own approximately 24% of the company's ordinary shares, have agreed to vote in favor of the transaction.

In accordance with the merger agreement, Kerzner will now solicit superior proposals during the next 45 days. In order for Kerzner to enter into any superior transaction, the investor group will receive a break-up fee of 1% of the equity value of the transaction, or approximately $30 million. Kerzner officials say the company does not intend to disclose developments with respect to the solicitation process unless and until its board has made a decision.

Kerzner chief executive Butch Kerzner says his company remains fully committed to all of its current development and expansion plans as scheduled, including its Phase III expansion on Paradise Island, its joint ventures in Dubai and Morocco, and its bid for one of the two casino licenses to be issued by the Government of Singapore.

"My father's and my confidence in the business is reflected by the fact that we will increase our ownership interest in the company to about 25% upon the completion of this transaction," he says in a prepared statement. "We anticipate that all employees, including the existing management team, will retain their current positions after our transaction closes."

Kerzner International Limited's flagship brand is Atlantis. Its Paradise Island property is a 2,317-room, ocean-themed destination resort that is currently being expanded with a 600-room, all-suite luxury hotel and a significant enhancement of Atlantis's water-based attractions. Kerzner also is developing a second Atlantis property on one of the manmade Palm islands under construction in Dubai. Atlantis, the Palm will have approximately 1,500 rooms and is scheduled to open in late 2008.