Sharp Says Four Seasons Sale Inevitable

NEW YORK CITY-Monday, Four Seasons Hotels Inc., to the surprise of some in the industry, announced it was in talks to go private. A joint venture, made of Bill Gates’ Cascade Investments and Prince Alwaleed Bin Talal Bin Abdulaziz Alsaud’s Kingdom Hotels International, offered to acquire the outstanding limited voting shares of the company for $82 per share. The deal is valued at $3.7 billion. Isadore Sharp’s Triples Holdings Ltd, the current controlling shareholder, will hold 10% of the shares of Four Seasons through a separate class of voting shares.

In a press conference on Monday to formally announce the move to take Four Seasons private, CEO Sharp said, “I do recognize that this announcement has probably come as a bit of surprise to all you.” Lou Plasencia, president and CEO of the Plasencia Group Inc, says, “There was some conjecture in close circles, but it had not really gone public.”

The deal could be a way for Sharp to semi-retire, says Sumner Baye, president of Hotel Network. “It will be interesting to see if he retires,” Baye says, “if he’s cashing out.” For his part, Sharp said during the press conference that he will remain as chairman and CEO of the company even after it goes private and did not mention retirement as an option. He did, however, say the idea of the transaction was appealing to him because he knew eventually the company would need to be sold.

“Given that a change of ownership of Four Seasons was ultimately inevitable because someday my children would have needed to sell,” Sharp said. “I began to think about the advantage of being able to select long-tem partners and to manage an ownership transition while I continue to be fully engaged in running the business.”

Sharp also said that prior to being approached about the possibility of being taken private by Cascade and Kingdom this summer, the idea had not entered his head. “I was not planning to undertake this sort of transaction,” Sharp said. An individual familiar with the hotel management company suggested the possibility, which resulted in the current deal on the table.

Citing both Kingdom and Cascade’s commitment to the company’s goal of managing medium-sized luxury hotels, Shard said, “This proposal achieves all objectives and it is the only one I am prepared to pursue.” Both companies have been long-time investors in the Four Seasons. Plasencia agrees in the shared focus the new ownership will have, “Kingdom and Cascade are exceptional investors who share are likely to share Sharp’s long-term vision for Four Seasons and should help to ensure that the chain’s core values and strategy will be preserved and expanded for the very long term.”

The deal is prone to customary closing regulations, including a two-thirds in favor vote from shareholders. Baye says it will be interesting to see if shareholders believe they will receive the best value for their stock. At $82 per share, Baye says he would not be surprised to see shareholders looking to raise that number to over $100 per share. He cites the company’s jump on the stock exchange after the announcement–stock went up 19 points Monday.

Plasencia sees value in the proposed transaction. “Given the caliber of the brand’s ownership and the sizeable investment by Kingdom and Cascade, we believe the long term impact to any owner of a Four Seasons will only be an enhancement of the value of the underlying real estate,” he says.

Four Season’s board of directors has established a special committee of independent directors to review the proposal. The committee will also hire a separate financial advisor to analyze the deal. There is no word yet on how soon the committee will have results or when a shareholder vote will take place. Four Seasons will hold its Q3 financial report on Thursday.