Vail Resorts To Acquire Peak Resorts, Owner Of 17 U.S. Ski Areas… Wow !

Vail Resorts, Inc. (NYSE: MTN) today announced it has entered into a definitive merger agreement to acquire 100 percent of the outstanding stock of Peak Resorts, Inc. (NASDAQ: SKIS) at a purchase price of $11.00 per share, subject to certain conditions, including regulatory review and Peak Resorts’ shareholder approval.
 
Through the acquisition, Vail Resorts will add 17 U.S. ski areas to its network of world-class resorts. Located near major metropolitan areas, including New York, Boston, Washington, D.C., Baltimore, Philadelphia, Cleveland, Columbus, St. Louis, Kansas City and Louisville, the resorts include:

• Mount Snow in Vermont
• Hunter Mountain in New York
• Attitash Mountain Resort, Wildcat Mountain and Crotched Mountain in New Hampshire
• Liberty Mountain Resort, Roundtop Mountain Resort, Whitetail Resort, Jack Frost and Big Boulder in Pennsylvania
• Alpine Valley, Boston Mills, Brandywine and Mad River Mountain in Ohio
• Hidden Valley and Snow Creek in Missouri
• Paoli Peaks in Indiana

“We are incredibly excited to have the opportunity to add such a powerful network of ski areas to our Company,” said Rob Katz, chairman and chief executive officer of Vail Resorts. “Peak Resorts’ ski areas in the Northeast are a perfect complement to our existing resorts and together will provide a very compelling offering to our guests in New York and Boston. With this acquisition, we are also able to make a much stronger connection to guests in critical cities in the Mid-Atlantic and Midwest and build on the success we have already seen with our strategy in Chicago, Minneapolis and Detroit. The acquisition fully embodies our philosophy of Epic for Everyone, making skiing and riding more accessible to guests across the U.S. and around the world.”
 
“The ski areas within the Peak Resorts portfolio exemplify the spirit of our sport as well as our Company’s mission to provide an Experience of a Lifetime to guests,” Katz continued. “We’re thrilled to welcome the resorts and their employees into the Vail Resorts family and invest in their continued success.”
 
“Vail Resorts has a proven track record of celebrating the unique identity of its resorts, while continually investing in the guest and employee experience. For this reason, we are confident that our resorts and employees will continue to thrive within the Vail Resorts network,” said Timothy Boyd, president and chief executive officer of Peak Resorts. “We are very proud of our track record over the last two decades in building the breadth, quality and accessibility of our resorts. We are thrilled that our guests will now have access to some of the world’s most renowned resorts.”

“For over 22 years, our team has worked tirelessly to create what is one of the country’s premier ski resort companies, with 17 properties across the Northeast, Mid-Atlantic and Midwest. We are now delighted to announce this agreement with Vail Resorts that creates substantial value for our shareholders and new opportunities for our guests,” said Timothy D. Boyd, President and Chief Executive Officer of Peak Resorts. “During my time in the industry, I’ve come to know and respect Vail Resorts and believe they will build on our accomplishments and further improve the experience that our loyal guests enjoy both on and off the mountain.

“An important driver of our success is the Peak Pass, the leading season pass option for Northeast skiers and riders. With a growing number of customers taking advantage of unlimited access to resorts such as Mount Snow and Hunter Mountain, the Peak Pass has become a valuable asset. Our properties are also in excellent condition thanks to a number of recently completed capital projects, including upgrades to our snowmaking capabilities, terrain expansions and infrastructure improvements. Going forward under Vail Resorts’ leadership, we expect guests will see a continued focus on the customer experience that will further the appeal and growth of our resorts and the strong affinity of our guests. Furthermore, I believe our extremely capable team will become an integral part of the long-term Vail Resorts success as they represent a tremendous asset to our guests and to our resorts.”

When the transaction closes, the 2019-20 Epic Pass, Epic Local Pass and Military Epic Pass will include unlimited and unrestricted access to the 17 Peak Resorts ski areas. Guests with an Epic Day Pass will also be able to access the new ski areas as a part of the total number of days purchased. For the 2019-20 season, Vail Resorts will honor and continue to sell all Peak Resorts pass products, and Peak Resorts’ pass holders will have the option to upgrade to an Epic Pass or Epic Local Pass, following closing of the transaction.
 
Additional Transaction Details
 
The aggregate purchase price for all Peak Resorts common stock is estimated to be approximately $264 million (calculated on a treasury method basis), which Vail Resorts intends to finance through a combination of cash on hand, its existing revolver facility and an expansion of its existing credit facility. In addition, Vail Resorts will be assuming or refinancing Peak Resorts’ outstanding debt.
 
The acquisition is expected to generate incremental annual EBITDA of approximately $60 million in Vail Resorts’ fiscal year ending July 31, 2021, the first fiscal year with the full benefit of the synergies of the acquisition, with additional revenue upside in future years.  Synergies are expected to come from additional revenue across the Vail Resorts network of resorts and cost reductions from the elimination of certain duplicative administrative functions and greater efficiencies brought by Vail Resorts’ size and scale. Vail Resorts’ annual ongoing capital expenditures are expected to increase by $10 million to support the addition of the Peak Resorts ski areas. After closing of the transaction, Vail Resorts plans to invest approximately $15 million over the next two years in one-time capital spending to elevate the guest experience at these resorts. 
 
The transaction was approved by both companies’ Boards of Directors, and the Peak Resorts Board of Directors also recommends that Peak Resorts’ shareholders approve the transaction.
 
The transaction is expected to close this fall. The parties expect operations at all Peak Resorts ski areas to continue in the ordinary course of business. Upon closing, Vail Resorts plans to retain the vast majority of each resort’s employees.