MANAGEMENT-LED BUYOUT TARGETS MAJOR HOTELIER

Four Seasons Hotels (NYSE:FS), one of the world's most luxurious hotel brands, announced plans to go private in November. Saudi-based Kingdom Holdings International and Bill Gates' Cascade Investment LLC are teaming up with Four Seasons' founder and chairman Isadore Sharp on the $3.37 billion deal.

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If Four Seasons shareholders approve the sale, the takeout price would represent a 28% premium over the closing share price before the deal was announced.

“[This Four Seasons deal] just stirs the pot one more time for more private bids to come for other companies,” says Amit Kapoor, research analyst at Gabelli & Co. based in Rye, N.Y. “But real-estate heavy companies will continue to be in the cross hairs of private buyers for their real estate.”

Many hoteliers have exploited soaring property values by selling off assets and focusing their efforts on management instead. Kapoor says that the strategy typically involves selling properties, retaining as many management contracts as possible and freeing up capital for share buybacks.

The Four Seasons deal should give the public-to-private trend added momentum, too. Private players still have incredible buying power due to historically low interest rates. And the chance to gain exposure to one of the real estate market's hottest sectors is hard to resist.


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