Vail acquires Peak Resorts

[marzNC]

Here's Powder Mag's take on the Vail buy out of Peak shares. Note that the price offered is $11/share. The share price had been around $4/share over the last year.

https://www.powder.com/stories/news...i-areas-in-northeast-owned-by-sackler-family/

I forgot that Peak Resorts doesn't actually own all of the resorts they operate. Peak sold some properties to a real estate holding company, EPR, and had long-term operating leases. That was one way to avoid having to borrow every more money for capital projects. EPR also owns Northstar, with VR as the long-term operator as of 2010.

https://www.eprkc.com/portfolio/recreation/ski-areas/property-list/

OPERATED BY PEAK RESORTS as of July 2019

Mount Snow, VT (southern VT)
Hunter Mountain, NY (Catskills)
Jack Frost and Big Boulder, PA (near Philadelphia)
Alpine Valley, OH (near Cleveland)
Boston Mills/Brandywine, OH (near Cleveland)
Mad River Mountain, OH (near Columbus)

 

[marzNC]

Reading local articles related to Peak resorts going to VR is far more interesting because each region has different markets and direct competitors. The following article also includes notes about the repairs that are planned or on-going for chairlifts at Attitash.

July 22, Conway Daily Sun in NH
Local ski officials react to Peak sale
". . .
Shannon Dunfey-Ball, marketing and communications manager for Ski NH, the Conway-based, statewide industry consortium, said: "Vail has an outstanding track record for community investment, environmental stewardship and employee development.

“They have (the marketing muscle) to bring people to the mountains. and I think that will help to draw people to the valley. It definitely has that potential, and I think the valley is ready for this opportunity to bring more winter visitors,” she said.

It remains to be seen whether Vail will join Ski NH.

Dunfey-Ball said New Hampshire has a long tradition of friendly ski industry collaboration and competition. “We at Ski NH are confident that that friendly competition and the spirit of working together will continue,” she said.
. . ."

 

[marzNC]

For those who are aware of the history of VR acquisitions since the Epic pass came on the scene in 2008, the addition of the Peak Resorts locations makes good sense. Although Snowtime (Whitetail, Liberty, Roundtop) passholders in the DC area were happy when Irv Naylor sold to Peak Resorts instead of VR, the transition might have gone smoother in the long run without one season under Peak ownership.

The Forbes writer who covers multi-resort passes summarized what I was thinking on the day the announcement of the merger. VR gained more direct access not only to the Boston and NYC/NJ markets, it increased it's hold on the midwest market in OH, IN, MO. The three resorts that VR bought in 2012 and 2016 cover WI, IL, and MI.

July 22, 2019, Forbes
Ski Travel Revolution: Vail Acquires 17 More Ski Resorts, Expands Epic Pass

" . . .
For skiers and snowboarders, the big impact will be for those in large urban areas on the east Coast and Midwest, tens of millions of Americans. One of Vail’s most successful strategies has been to use smaller feeder mountains near large cities, like Michigan’s Mt. Brighton, which serves the Detroit and Chicago metro areas, to lure travelers into its Epic Pass program. The idea is that if you ski at home on weekends and take one or more big ski vacations a year out west (or to Europe or Japan), by choosing the Vail-owned local spot as your home hill and buying the Epic Pass, you also get the free skiing at many of the best and most famed destination resorts on earth when you travel, a real win-win for skiers. However, until now, this has been limited to a few key metro areas like Boston (Mt. Sunapee) and Minneapolis (Afton Alps). With today’s move, Vail now adds many of the best options that are closest to New York, Boston, Washington, D.C., Baltimore, Philadelphia, Cleveland, St. Louis and Kansas City.
. . ."

 

[marzNC]

When Stowe was added to Epic, Outside Online had an article speculating about impending changes. The ideas were based on what happened at aquisitions out west, like Park City or Kirkwood. However, no mention was made of the three midwest ski areas/resorts (2012, 2016). Fair to say that what has happened at W-B or Heavenly is not going to be a model for what changes at Whitetail or Attitash or even Mt Snow. The folks who are regulars at Afton Alps and Wilmot seem pretty happy with VR. There haven't been any closures of direct competitors in that region as far as I know. Business leaders in North Conway are optimistic that VR marketing power will help bring more people to the area now that Attitash and Wildcat will be on Epic. Bottom line is that there are a lot of different ways to look at the coming change, with as much positive as negative.

Feb 2017, Outside Online
8 Ways Vail Will Change Your Local Ski Hill

 

[marzNC]

So what you're saying is we shouldn't expect gates here in the mid-Atlantic anytime soon. lol

After looking around more carefully about the RFID system that VR uses, it's now clear to me that hand scanners is the only method used for lift access. Using hand scanners was a deliberate decision back in 2007 when VR started developing the RFID system. Choosing a system based on UHF technology allowed the development of EpicMix. Skiing at Sunapee last season was the first time I'd been at a VR location.

For more about RFID for ski lifts:
https://www.theskidiva.com/forums/index.php?threads/more-ski-resorts-going-to-rfid.19676/

 

[marzNC]

There is definitely a lot to learn about the history of VR and the industry in general. So many facets to the business of which most of us are blissfully unaware!
. . .
The FB post was a decent intro foray for someone less-knowledgable like me into some of the potential considerations re: acquisition strategy.

Seems like a good B-school case study!

Agree that MBA students could learn a lot from the history of VR.

There is one statement in the essay that I think indicates the author doesn't know what VR is doing when it comes to technology or management of a diverse set of resorts after 10 years of growth by aquisition. He wrote: "There are limited opportunities for economies of scale in operating many different resorts, and that doesn't lend itself as well to consolidation, and treating all resorts the same puts you at a disadvantage in some respects." He has a northeast bias with good knowledge about the big resorts out west. But I doubt he has skied in the midwest. VR didn't treat the first three midwest ski resorts the same as W-B or Stowe. I agree with him that executives from one region have a hard time understanding a different one. Peak Resorts ran into a similar problem after buying Snowtime in PA, which draws from DC, northern VA, and Baltimore.

My professional background involved databases. I also had technical experience with administrative software (HR, business finances) as my company grew by leaps and bounds in a very short period of time into a corporation with 17,000 people in multiple offices and multiple countries across the world. The more I learn about how VR integrates new resorts in terms of RFID for lifts, EpicMix, the administrative system for HR, the website for buying Epic passes, and other aspects touched on in the July podcast, the more I appreciate the impact of decisions made in 2007-10.

https://www.facebook.com/groups/NESkiWeather/permalink/370409636955789?sfns=mo

 

[echo_VT]

As an hobby economist I don’t agree with the person’s assessment at all (shared on the Facebook post). I definitely see this as a win for skiers in the NE and as a win for resorts in the NE.

I know a lot of skiers and riders who ski/ride NH, VT and NY. Many of them will not buy passes here in the NE bc all their funds go toward visiting destinations out west.

This is already happening among 30 and 20 year olds who are working in major cities like NYC and Boston - and love to ski/ride. They do the local ski bus plus ticket trips from their various cities, or they carpool, and buy the 3 tickets for $99 at the start of the season. They don’t dare buy any more bc it’s not worth it to them.

They want to come more often locally, (I’ve heard this a lot!) - but the day pass is too expensive, and they already have their 2 west ski trips planned and paid for with MC, Ikon or Epic passes. They have to be ultra sure that conditions are good before they make a trip to the local NE mountains.

Combining a pass they already have for their out west trips to a local mtn will tear down that hurdle and they will be more likely to visit local NE mtns and more often even when it’s unclear about conditions. Yes, this means longer lines but it will be good for NE business.

There’s a reason why the price jumped from $4/sh to $11/sh. It will be good for bringing in business for NE resorts.

That said, I don’t know about improvements, I am guessing they want their NE customers happy so they will continue to make improvements to local mtns. These are the customers they are servicing out west so it doesn’t make sense to me that they’d make NE customers upset by not fixing stuff.

I said this before but youth and education is the only way to ensure the longevity of the sport. If they don’t pour money into it and reduce the barriers to entry, they will have no skiers left to serve.

 

[marzNC]

There’s a reason why the price jumped from $4/sh to $11/sh. It will be good for bringing in business for NE resorts.

Actually I think the offer price is based on the fact that VR had to make a major shareholder of Peak Resorts happy with the idea of a sale.

Since you are interested, check out these two articles looking at VR (MTN) strictly from a stock value perspective. The first one calls Peak Resorts a "rival" to VR. Don't think the write knows the much about the ski industry considering that there is no mention of Alterra. The second analysis may be somewhat obsolete at this point. I haven't read it carefully yet.

https://seekingalpha.com/article/4277034-vail-resorts-purchase-peak-resorts-sensible-acquisition - July 24, 2019

https://seekingalpha.com/instablog/...296280-mtn-meltdown-short-thesis-vail-resorts - April 23, 2019

 

[marzNC]

I know a lot of skiers and riders who ski/ride NH, VT and NY. Many of them will not buy passes here in the NE bc all their funds go toward visiting destinations out west.

This is already happening among 30 and 20 year olds who are working in major cities like NYC and Boston - and love to ski/ride. They do the local ski bus plus ticket trips from their various cities, or they carpool, and buy the 3 tickets for $99 at the start of the season. They don’t dare buy any more bc it’s not worth it to them.

They want to come more often locally, (I’ve heard this a lot!) - but the day pass is too expensive, and they already have their 2 west ski trips planned and paid for with MC, Ikon or Epic passes. They have to be ultra sure that conditions are good before they make a trip to the local NE mountains.

Combining a pass they already have for their out west trips to a local mtn will tear down that hurdle and they will be more likely to visit local NE mtns and more often even when it’s unclear about conditions. Yes, this means longer lines but it will be good for NE business.

Makes sense to me. The group you are talking about are too busy to be posting on FB or online ski forums. So their thinking is often not heard by those who are active posters. Just as the opinions of most active seniors who are skiing 2-3 days a week and taking ski club trips out west aren't known that broadly.

I looked around and found some ski clubs that are offering up to $50 off a club ski trip if someone buys an Epic or Ikon pass. The discount doesn't come from VR or Alterra or apply directly to the pass. But it's an interesting connection.

 

[echo_VT]

Yes the 2nd is obsolete.

So - I am not sure you are understanding the content of the first? The first is stating that VR underpaid and got a smallish deal based on profitability metrics he/she drew out. It is a fair deal but they still win a little. It does seem like there is a likelihood that it is actually a deal for VR.

Er - No one will make an offer price to simply make the aquiree happy. This is to get the shareholders to wholeheartedly approve with no glaring reason why the shareholders would say no and delay the acquisition. Also reducing the risk of another better offer from a competitor is definitely at play here. This could have been a hostile takeover with the same result. The offer is typically made if it makes sense for both businesses - which is what I see here.

Apologies if this sounds bizarre - I come from a M&A background and pricing background with equities for the past two decades. So I have a lot of ...opinions...

 

[echo_VT]

Makes sense to me. The group you are talking about are too busy to be posting on FB or online ski forums. So their thinking is often not heard by those who are active posters. Just as the opinions of most active seniors who are skiing 2-3 days a week and taking ski club trips out west aren't known that broadly.

I looked around and found some ski clubs that are offering up to $50 off a club ski trip if someone buys an Epic or Ikon pass. The discount doesn't come from VR or Alterra or apply directly to the pass. But it's an interesting connection.

I am on various Facebook ski and snowboard forums and it comes up a lot with the single as well as the families that ski. Also my colleagues who ski. To make the schlep when conditions are not as well known (say they don’t have a snow conditions update or say they don’t have a web cam) then it’s hard to commit and say I’m going to spend this time and money on gas and on the road to come to a mtn that has maybe has half their trails closed plus no snow... it’s just a really hard sell.

 

[marzNC]

Yes the 2nd is obsolete.

So - I am not sure you are understanding the content of the first? The first is stating that VR underpaid and got a smallish deal based on profitability metrics he/she drew out. It is a fair deal but they still win a little. It does seem like there is a likelihood that it is actually a deal for VR.

Er - No one will make an offer price to simply make the aquiree happy. This is to get the shareholders to wholeheartedly approve with no glaring reason why the shareholders would say no and delay the acquisition. Also reducing the risk of another better offer from a competitor is definitely at play here. This could have been a hostile takeover with the same result. The offer is typically made if it makes sense for both businesses - which is what I see here.

Apologies if this sounds bizarre - I come from a M&A background and pricing background with equities for the past two decades. So I have a lot of ...opinions...

I get the point that $11/share is a reasonable price even though it seems high given what Peak shares have been at for a while before the "merger" announcement on July 22. From an individual shareholder standpoint, feels like $8, $9, or $10 per share would still have been quite a windfall that would've been approved easily.

My husband is the one who pays attention to stock prices and related analysis in our house. Usually I stick to considering the impact on operations and ignore the financial aspects. But it's summer and I got time to read all sorts of articles.

What do you think of the statement in the Powder Mag article? The bold is mine. I know people who were essentially going to boycott Peak locations after the Sackler Foundation bought a large chunk of Peak Resorts (SKIS) in late 2018.

https://www.powder.com/stories/news...i-areas-in-northeast-owned-by-sackler-family/
" . . .
The Sacklers acquired a controlling interest in Peak Resorts in 2018 after helping finance a $76 million acquisition of three Pennsylvania ski areas. Last week, Vail and the Sacklers filed an agreement for Peak Resorts.

The deal isn’t final until all the company’s shareholders vote to adopt and approve it at a special meeting, date TBA, but the shareholders will almost certainly bite, considering Peak stock (SKIS) bounced around in the $4 range over the past year and Vail is offering $11 per share.
. . ."

 

[echo_VT]

Ah - I am not sure. Assuming all the shares are voting shares - If the S family owns more than 50% it appears as it would likely to go thru and then the deal would be subject to monopolistic scrutiny by some federal body.

So that may be a non issue if they have a “controlling interest” - it’s unclear here what that specifically means - I have seen it mean 30%.

And yes If the S family owns more than 50%, it makes sense that VR and the S family filed this together. Although, I’m unclear if the S family is putting more funds into Peak with VR for this acquisition.

If the S family owns less than 50%, shareholders may still listen to this family or go against them when that time comes and perhaps make additional demands. It’s hard to say when the eggs are partially in specifically someone’s basket instead of a collective.

It’s hard to tell based off the articles, definitely need a few more concrete numbers...!

 

[liquidfeet]

I don’t know if anyone here is on this FB group, but thought this was an interesting viewpoint/theory/analysis on VR strategy: https://www.facebook.com/groups/NESkiWeather/permalink/370409636955789?sfns=mo

This is well worth reading in its entirety, if only to get one perspective on what might happen with the newly purchased resorts in the next few seasons here in the North East.

 

[marzNC]

Ah - I am not sure. Assuming all the shares are voting shares - If the S family owns more than 50% it appears as it would likely to go thru and then the deal would be subject to monopolistic scrutiny by some federal body.

So that may be a non issue if they have a “controlling interest” - it’s unclear here what that specifically means - I have seen it mean 30%.

And yes If the S family owns more than 50%, it makes sense that VR and the S family filed this together. Although, I’m unclear if the S family is putting more funds into Peak with VR for this acquisition.

If the S family owns less than 50%, shareholders may still listen to this family or go against them when that time comes and perhaps make additional demands. It’s hard to say when the eggs are partially in specifically someone’s basket instead of a collective.

It’s hard to tell based off the articles, definitely need a few more concrete numbers...!

Here are articles from 2018 and 2019 related to how much one of the S families is involved in the ski industry by controlling shares in Peak Resorts. Don't have the patience to read slowly. See if it sheds any more light on the subject.

The WSJ article notes that shares of VR are held as well. The diagram of the clan is useful. The actual owner is CAP1, so when Peak was getting funding from CAP1 investments, the S family was never mentioned in media reports. Goes back a few years. The Boston Globe article mentions loans that are somehow tied to the relationship between the S family and Peak. The first part of the July VT Ski & Ride article is the VR press release. There is a brief history of Peak Resorts in the second part.

https://vtdigger.org/2019/04/18/family-ties-opioid-crisis-takes-majority-control-mount-snow/ - April 2018

https://www.wsj.com/articles/hedge-fund-tosses-family-that-controls-maker-of-oxycontin-11551985100 - March 2019

https://www.bostonglobe.com/busines...rsy-vermont/kkKmJr2iAS5elYB91f2ooL/story.html - May 2019

https://vtskiandride.com/why-vail-is-buying-mount-snow-and-16-other-ski-areas/ - July 2019


Lately I've been reading books about the ultra-wealthy families of the Gilded Age in the late 19th and early 20th centuries. In particular those who were based in NYC and spent the summer in Newport, RI lately like the Vanderbilts. Some things haven't changed but it was a lot easier to hide before the Internet age.

 

[marzNC]

Looks like the easiest way to see where it’s possible to buy a 1-location season pass at ski areas/resorts owned by VR is to select All Passes on the Epic website and scroll down. A pass for Keystone only is $369 and includes a few days at Breck and Crested Butte. Reading from the bottom up, can see the prices for Stevens Pass, Mt. Brighton, Afton Alps, Wilmot, and Kirkwood for roughly $400-500.

Folks in the mid-Atlantic and northeast will be pretty happy if the list of 1-location or regional Epic options gets longer after the Peak Resorts sale is complete. Seems like a phone call to the contact number of the Epic website asking about getting a 1-location pass in the northeast or PA couldn’t hurt. Meaning before the merger is complete in the fall. Of course, even in the Internet age, sending a letter probably still can be effective.

 

[marzNC]

Seems that Vail Resorts is quite sure the "merger" with Peak Resorts will be completed as anticipated. Pretty prominent on the Epic pass homepage if you scroll down a bit.

 

[tinymoose]

I just wanted to correct a previous statement I made. Jack Frost this past year had gone to RFID but was using hand scanners. I didn't ski much this past winter b/c of going back to school and so only went to Montage (pass holder) and also Blue for race clinics, so wanted to correct that.

I find it weird that the one article mentions Cleveland and Alpine Valley as access to major metro areas, because Columbus is the largest city in Ohio by a good bit, in addition to being the state capital. I guess Cleveland is more well known historically, but Columbus is where it's at anymore as far as Ohio goes. Has been since I graduated college. I mean, most people probably don't realize it, but Columbus is the 14th largest city in America.

 

[marzNC]

Apparently an investor for Mount Snow filed a suit against Peak Resorts to stop the merger with Vail Resorts.

Sept. 1, 2019, Brattleboro Reformer
Mount Snow investor sues over merger

"ST. LOUIS, Mo. — An investor in Mount Snow’s parent company, Peak Resorts, wants to stop a vote on whether it will merge with Vail Resorts unless more information is disclosed.

John Field’s lawsuit accuses Peak Resorts executives and its board of directors of violating disclosure rules of the United States Securities Exchange Act of 1934 and a Securities Exchange Commission rule regarding statements required by firms when soliciting shareholder votes. It seeks to stop a vote on the proposed $463.6 million transaction, which is anticipated to close this fall.
. . ."

 

[Ski Sine Fine]

Apparently an investor for Mount Snow filed a suit against Peak Resorts to stop the merger with Vail Resorts.

Sept. 1, 2019, Brattleboro Reformer
Mount Snow investor sues over merger

"ST. LOUIS, Mo. — An investor in Mount Snow’s parent company, Peak Resorts, wants to stop a vote on whether it will merge with Vail Resorts unless more information is disclosed.

John Field’s lawsuit accuses Peak Resorts executives and its board of directors of violating disclosure rules of the United States Securities Exchange Act of 1934 and a Securities Exchange Commission rule regarding statements required by firms when soliciting shareholder votes. It seeks to stop a vote on the proposed $463.6 million transaction, which is anticipated to close this fall.
. . ."

Nooooo! Very selfishly I hope this doesn’t stop or delay the merger.