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Alwaleed and Gates team up for hotel bid

Saudi Arabia’s Prince Alwaleed Bin Talal has teamed up with Microsoft’s Bill Gates in a bid to buy the Four Seasons Hotel chain for US$3.7bn, or $82 per share - an offer that is 28% higher than the company’s closing price of US$63.87 in New York earlier this month.

Saudi Arabia’s Prince Alwaleed Bin Talal has teamed up with Microsoft’s Bill Gates in a bid to buy the Four Seasons Hotel chain for US$3.7bn, or $82 per share - an offer that is 28% higher than the company’s closing price of US$63.87 in New York earlier this month.

Four Seasons Chairman and CEO Isadore Sharp’s family plans to keep a 10% stake in the company, while Gates and Alwaleed will share the rest, according to a Four Seasons statement.

Sharp, the founder of the chain, opened the first Four Seasons in Toronto in 1961. Today the hotel chain operates or plans to open 74 hotels.

Sharp said that this transaction, with Alwaleed and Gates as investors, would be the only one he is prepared to pursue.

Alwaleed is bidding through his Kingdom Holdings International, and Gates is bidding through an investment company called Cascade Investments.

Once the transition is completed Sharp would stay chairman and CEO of the organisation, leaving him to supervise all operations and strategic decision of the company. The firm would also keep its headquarters in Toronto, Canada. Sharp would moreover be entitled to realize proceeds of about US$288m related to a long-term incentive agreement created in 1989.

Four Seasons said it has set up a special committee of independent directors to supervise the bid and to make suggestions.

Sharp said, “Bill Gates and Prince Alwaleed share my long-term vision and commitment to this company. This deal provides a significant premium to minority share holders, as well as continuity and stability for our hotel owners, customers and employees for the long term.”

“This transaction is intended to ensure the legacy of the Four Seasons,” he added. “This proposal achieves all my objectives for Four Seasons and my family.”

The deal is however depending on shareholders and regulatory approvals.

Triples, the Sharp family’s holding company, confirmed that Kingdom and Cascade would acquire the limited voting shares of the Four Seasons for US$82 per share, with Triples keeping its Four Seasons investment.

Alwaleed already owns a 23% stake in the Four Seasons, and Cascade owns a 8.25% stake.

Shares of Four Seasons have gained 18% in the last year. The hotel’s Q2 profit however declined by some 40% when the Canadian dollar depreciated against the US dollar. Net income amounted to more than US$9m, with revenues declining by 9% to US$76m due to the company’s sale of its interests in the Pierre Hotel in New York.

Gates and Alwaleed have supposedly been collaborating for at least two years on this deal. It is believed that the two agreed over a dinner at Gates' home in Washington in 2004 to push for the venture. Also, Alwaleed is said to have promised to help Microsoft to expand further into the lucrative Saudi Arabian market.

The two billionaires and high-profile investors have reportedly further discussed to jointly support humanitarian projects in the kingdom, a subject close to both Alwaleed who is a declared supporter for women’s rights – Kingdom Holdings is known for hiring the first Saudi female pilot ever - and Gates who, together with his wife, runs several charitable initiatives worldwide.

The Four Seasons acquisition follows Alwaleed’s first Canadian hotel purchase earlier this year, when Kingdom hotels bought a stake worth US$3.9bn of the Fairmont Hotels and Resorts in January.

Kingdom Hotels is one of several companies through which Alwaleed invests. The company’s interests include banking, real estate, telecommunications, broadcasting and media, entertainment, hospitality, computers and electronics, agriculture, restaurants, upscale fashion, retailing, supermarkets, tourism, travel and automotive manufacturing.

Its best known international investments include Amazon, Apple, Boeing, City Group, Ford, Coca Cola, Gilette, ebay and Mc Donald’s.

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