Vail Resorts, Inc. (NYSE: MTN) announced last week that it has entered into an agreement to purchase the ski fields at Falls Creek Alpine Resort and Hotham Alpine Resort in Victoria, Australia. Falls Creek, Victoria's largest ski resort, features a variety of terrain including fantastic beginner and intermediate trails that are well suited to families and first-timers. Considered the 'Powder Capital' of Australia, Hotham is the only resort in the Southern Hemisphere where the village is located on top of the mountain, ensuring ski-in, ski-out opportunities from anywhere in the village. The acquisition, which is subject to certain regulatory approvals, is expected to close prior to the commencement of the Australian snow season in June 2019.
The Company will purchase Australian Alpine Enterprises Holdings Pty. Ltd and all related corporate entities that operate Falls Creek and Hotham resorts from Living and Leisure Australia Group (LLA), a subsidiary of Merlin Entertainments, for a purchase price of approximately AU$174 million, subject to certain adjustments at closing, including an increase (or reduction) in the price for operating losses (or gains) incurred for the period from Dec. 29, 2018 through closing. The acquisition includes ski school, retail/rental, reservation and property management operations at both resort areas.
"We are thrilled to welcome the guests and employees of both Falls Creek and Hotham into the Vail Resorts family and further strengthen our position in Australia, which is one of our most important international markets. The acquisition of the leading mountain resorts in Victoria is part of our continued strategy to drive season pass sales and build loyalty with guests from around the world," said Rob Katz, chairman and chief executive officer of Vail Resorts. "After our success connecting with skiers in Sydney and across New South Wales since acquiring Perisher in 2015, we have a huge opportunity to create a deeper connection with Melbourne and broader Victorian skiers and riders."
"Vail Resorts has a great track record in developing world-class resorts," said Nick Mackenzie, Managing Director of Merlin Entertainments' Midway division. "We're confident that guests, employees and the surrounding communities of Hotham and Falls Creek will benefit from Vail Resorts' expertise, investment and know-how, and we wish the teams every success for the future."
When the transaction closes, the 2019 Epic Australia Pass and 2018-19 Epic Pass will include unlimited, unrestricted access to Falls Creek and is expected to include unlimited, unrestricted access to Hotham, subject to certain approvals. The Epic Australia Pass is the best value season pass for Australians, providing access to world-class skiing and riding at the largest and most celebrated resorts in the U.S., Canada, Japan and Australia. At just AU$839 for adults, AU$471 for students and AU$629 for seniors, the Epic Australia Pass pays for itself in under four days, with year-around skiing in Australia, Japan, Canada and the Best of the U.S. The Epic Pass offers world-class access including unlimited, unrestricted skiing and riding at Vail, Beaver Creek, Whistler Blackcomb, Breckenridge and more, including limited day access to several resort partners, including Telluride, Sun Valley, Hakuba Valley, Rusutsu and more.
Closing of Transaction
The transaction, which is subject to certain regulatory approvals, is expected to close prior to the commencement of the Australian snow season in June 2019. Operations at the two resorts will continue in the ordinary course of business, as will 2019 winter seasonal hiring. Upon closing, Vail Resorts plans to retain the vast majority of each resort's employees.
The Company indicated that it expects Falls Creek and Hotham to generate incremental Resort Reported EBITDA of approximately AU$18 million (approximately US$13 million) during its first twelve months of operation following the acquisition, which assumes normal conditions. After closing of the transaction, annual ongoing capital expenditures are expected to increase by approximately AU$4-5 million (approximately US$3-4 million) to support the addition of these two resorts.
About the Resorts
Victoria's largest alpine resort, Falls Creek features 450 hectares of terrain. With roughly 90 runs accessed by 14 lifts, there is a huge variety of terrain including fantastic beginner and intermediate trails that are well suited to families and first-timers. For advanced skiers and riders, the Summit is packed with steep black runs and is the launching pad for the deep powder stashes and tree runs of the Maze. Falls Creek provides a variety of different lodging properties alongside great restaurants, bars, and nightlife.
Hotham is nestled amongst the Victorian Alps of the Great Dividing Range. Famous for its off-piste skiing and riding, Hotham is one of the few resorts in Australia that has access to true side-country terrain, some of which is above tree line. The resort boasts spectacular views, its own airport and 320 hectares of ski terrain. Considered the 'Powder Capital' of Australia, Hotham is the only resort in the Southern Hemisphere where the village is located on top of the mountain, ensuring endless awe-inspiring views and ski-in, ski-out opportunities from anywhere in the village. With 13 chairlifts, 3 terrain parks and 35km of cross country skiing, Hotham has something for everyone, including off-mountain activities like tobogganing, snowmobile rides, luxurious day spas and 18 restaurants to choose from.
Located in the picturesque Kosciuszko National Park in South Eastern New South Wales, Perisher's 1,214 hectares of skiable terrain, seven mountain peaks, five terrain parks, more than 100 groomed trails and over 100 kilometers of cross-country skiing trails, makes it the Southern Hemisphere's largest mountain resort. Perisher is comprised of four village areas - Perisher Valley, Smiggin Holes, Guthega, and Blue Cow – and has varied terrain suitable for any ability level.
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