Vail Resorts Gets a Steal in Park City Acquisition

The corporate press release shows that the Park City Mountain Resort deal is for $182.5 million from Powdr Corp. The terms of the acquisition are also subject to certain post-closing adjustments. Frankly, this deal looks like a major score for Vail, adding yet another key, well-known property to its portfolio.

Vail Resorts expects $35 million in incremental EBITDA in fiscal year 2015, and it anticipates additional contributions from the acquisition in future years. This acquisition is also expected to provide significant tax benefits over the next 15 years, including an average of approximately $12 million in additional annual taxable depreciation and amortization expense through fiscal 2021.

The acquisition includes all of assets of Greater Park City Co. (GPCC), the land used for ski terrain at the resort held by Ian Cumming, and certain base parking lands owned by Powdr Development Corp., which have approved zoning for approximately 687,000 square feet of residential and commercial development.

One thing that stands out here is that this is not an acquisition of Powdr nor of all of Powdr’s assets. The acquisition does not include the Gorgoza tubing operation, which is located approximately 10 miles from the resort. That property will be retained by Powdr.

With the acquisition, all aspects of the previously disclosed litigation have been settled and this dispute will no longer pose any future threat to disrupt the operation of the resort.

Vail Resorts shares hit an all-time high of $83.31 on the news, and the current gain of 7.9% to $82.68 gives Vail Reports a market capitalization rate of $3.0 billion. Vail’s consensus analyst price target prior to the effects of the Park City acquisition was $85.00.

What does it tell you when an acquirer hits all-time highs when it announces an acquisition?

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Vail Resorts’ subsidiaries are numerous:

• Mountain resorts of Vail, Beaver Creek, Breckenridge and Keystone in Colorado
• Heavenly, Northstar and Kirkwood in the Lake Tahoe area of California and Nevada
• Park City Mountain Resort and Canyons in Park City, Utah
• Afton Alps in Minnesota
• Mt. Brighton in Michigan
• Grand Teton Lodge Company in Jackson Hole, Wyo.
• RockResorts and Vail Resorts Development Co.