M&A in Ski Country

Intrawest Sale Signals Bull Market for Resorts

By Jonathan Weber, 8-11-06

Canadian resort operator Intrawest, whose properties include Whistler, Winter Park, Copper Mountain and the world's largest heli-skiing operation, has agreed to be acquired by Fortress Investment Group, a private equity firm, in a deal valued at $2.8 billion. The sale was seen by Wall Street analysts as a sign of optimism about the resort and lodging industry in general, which has only recently recovered fully from the 9/11 attacks. Vali Resorts, for example, rose 6% on the news even though the market was down for the day.

Reaction to the deal in Colorado's ski country was mixed, reports Bob Berwyn at the Summit Daily News, with some locals around Copper glad to see the Canadian giant go while others lamented the pending loss of a smart operator.

The deal brings uncertainty for the properties involved, since private equity players like the secretive Fortress are, by definition, not in it for the long haul. The Intrawest resorts are likely to be sold again within a few years, either piecemeal or as a package, possibly in the wake of some financial and operational jijitsu to make them even more attractive to the next buyers.

The deal itself was actually forced in part by a hedge fund, Pirate Capital, which claimed - correctly, as it turns out - that Intrawest shares were undervalued. The stock rose about 30% Friday on news of the transaction.

In general, resort properties such as those owned by Intrawest are financially attractive these days not so much as recreation businesses as real estate operations. Or, to put it another way, the real money is in the condos. One can expect that the real estate projects will be developed even more aggressively by the new owners.

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