Gates seals Four Seasons deal(2)

Bill Gates and Saudi Prince Alwaleed Bin Talal have backed a $3.8 billion take-private of Four Seasons, a chain of 74 luxury hotels.

Bill Gates, the billionaire owner of Microsoft, is leading a group of investors that will pay $3.8 billion (€2.9 billion) for Four Seasons, a luxury hotel chain.

Cascade, Gates’s investment vehicle, has teamed up with Kingdom Hotels, owned by Saudi Prince Alwaleed Bin Talal, and Four Seasons’ chairman and chief executive Isadore Sharp for the public-to-private deal, which values the 74-hotel chain at just under $4 billion.

A special committee of independent directors, appointed by Four Seasons, has voted unanimously in favour of the consortium’s $82.00 per share bid. It represents a 28.4 percent premium over the closing share price on November 3, the day before the bid was announced.

Sharp will be one of the biggest winners from the deal. As well as retaining a significant stake, he is set for a payout of around $289 million under the terms of a long-term incentive plan, the company said. He will also remain as chairman and chief executive.

It is the latest in a string of deals in the sector. In 2006, hotel real estate investment hit $72.5 billion, a 63% increase on 2005, with notable deals including Kingdom’s $3.24 billion acquisition of Fairmont Hotels & Resorts, a Canadian chain that manages London’s Savoy hotel, alongside Colony Capital. There has also been speculation about a bid for InterContinental Hotels Group, a rival chain.

The Four Seasons deal remains subject to a shareholder vote, which will take place in April and will require support from a two-thirds majority. Prince Alwaleed is currently the largest shareholder in Four Seasons, with a stake of about 22 percent. The size of his stake in the new structure has not been disclosed.

Merrill Lynch advised the special committee, while Citigroup and JP Morgan are financing the consortium’s bid.

Shares in Four Seasons closed at $81.35 last night, down $2.53.