30 January 2006
Saudi Prince Strikes Deal to Acquire Fairmont Hotels
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The Fairmont Royal York Hotel in
Toronto.
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Toronto - After rejecting a partial takeover bid from U.S. billionaire investor Carl
Icahn, luxury chain Fairmont Hotels & Resorts Inc. has found a Saudi prince to be its white knight.
Fairmont said Monday it has agreed to a buyout offer of $3.9 billion US from Kingdom Hotels International and Colony Capital.
Under the all-cash deal, a Canadian company owned by Kingdom, wholly owned by Saudi Prince Alwaleed bin Talal, and
Colony would buy all of Fairmont's shares at $45 US a share, a 28 percent premium over Fairmont's closing price 4 Nov 2005.
Fairmont's board is unanimously recommending the offer to stockholders, the company said Monday in a release.
"This transaction is the ideal means of delivering significant, immediate value to the company's current shareholders while
preserving this Canadian-based company and establishing a solid platform from which to grow", Fairmont chairman
Peter Godsoe said in the release.
Kingdom and Colony would combine Fairmont with the Asian-based Raffles hotel chain owned by Colony to create a
"luxury global hotel leader" with 120 hotels in 24 countries, the firm said.
Fairmont would continue to be based in Canada, while Raffles will also remain a separate brand.
The deal is valued at $5.5 billion US when the Raffles transaction is combined with the Fairmont buyout.
In December, Icahn said he was considering a bid for all of Fairmont after his attempt to acquire a 51 percent stake for $40 US a
share was panned by Fairmont's board of directors. He already owns 10 percent.
Icahn's offer, when extended for all of Fairmont, could have reached $3.5 billion US.
Fairmont stock closed Friday on the Toronto stock market at $50.44 Cdn.
The Toronto-based chain owns and operates 87 hotels with about 34,000 guest rooms in Canada, the United States,
Mexico, Bermuda, Barbados, Britain, Monaco, Kenya, and the United Arab Emirates.
Its properties include such Canadian landmark hotels as the Royal York in Toronto and the Banff Springs.
Fairmont also owns Delta Hotels, Canada's largest first-class hotel management company, which manages and franchises
38 city centre and resort properties.
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