International (Europe/Japan/Southern Hemisphere) Vail Resorts to Buy Falls Creek and Hotham in Australia

[Ulmerhutte]

Their reach keeps on expanding... https://unofficialnetworks.com/2018/12/20/vail-resorts-to-acquire-more-australian-ski-areas/ Vail Resorts already own the Perisher lift company (https://www.perisher.com.au/epic-australia-pass/the-resorts/vail,-colorado )

I am hoping this will be a positive. Merlin Entertainments, who currently run the lift companies at those 2 resorts, do not have any other ski-related assets and that shows. They are not well liked in the village. The perception was that those assets were cash cows to be milked, but only fed enough to stay alive (barely!). The senior management team have reputation for being arrogant and uncaring. So, all in all, more possibility of upside versus downside. Let's see.

 

[Jellybeans1000]

They were also trying to buy Mt Buller, but failed.

 

[Ulmerhutte]

They were also trying to buy Mt Buller, but failed.

Yup, the reports I read said as much. Seems like Grollo is attached to Buller.

 

[James]

Some background...

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[Tricia]

Hmmm, I saw this posted by Unofficial yesterday but was scratching my head because I didn't get a press release. I am on the list to get press releases.
Maybe I'm no the naughty list now.

Meanwhile, what does this mean for skiers in Australia?
What does it mean for skiers who want to visit Australia?

 

[Ulmerhutte]

Hard to know how this will impact skiing in Australia. I am guessing the strategy behind the acquisition is to increase catchment area of Vail’s USA resorts by offering discounts to Aussie skiers who buy season passes or something similar. It might be to get another point of access to the Chinese market... the number of Chinese at Falls was dramatically larger this year.

On balance, I think it will be good, or at least no worse. The total investment by Merlin on discretionary improvements was zero. Yes, they replaced one chair, but rumour had it that the regulator was intending to issue an adverse finding against the existing chairlift. That chair was 37 years old and the footings of one the towers had to be remedied 2 years ago.

The lack of maintenance this year was very obvious, with extended breakdowns almost every day.

Both Falls and Hotham have such great potential, but investment is needed to compete with overseas resorts for Australian skiers. I believe there would be many people who can only afford one major ski holiday a year. If the delta between the cost of skiing in Australia versus overseas is not that significant, but the facilities here are sub-standard, then the decision looks like a no-brainer.

 

[LKLA]

Hmmm, I saw this posted by Unofficial yesterday but was scratching my head because I didn't get a press release. I am on the list to get press releases.
Maybe I'm no the naughty list now.

Meanwhile, what does this mean for skiers in Australia?
What does it mean for skiers who want to visit Australia?

Vail has not put out a press release.

So far what we have is "just" reporting/news from the Australian Financial Review stating that Vail "will reportedly" but it.

 

[Jellybeans1000]

Vail has not put out a press release.

So far what we have is "just" reporting/news from the Australian Financial Review stating that Vail "will reportedly" but it.

As Vail is on the stock exchange, it has to answer these rumours in the AFR, in a press release at some point. Apparently it is meant to be done when business closes in Colorado.

 

[LKLA]

As Vail is on the stock exchange, it has to answer these rumours in the AFR, in a press release at some point. Apparently it is meant to be done when business closes in Colorado.

No it does not need to answer or comment on rumors be in the AFR or WSJ or LA Times. Very much not so. Same goes for rumors it is buying Smugglers Notch. Unless the rumor is impacting the share price, which in this case it is not, 99% of public companies would not comment on news / rumors / speculation / innuendo / postings on Pugski

Having said that, this seems like it is likely true so at some point - sooner rather than later - Vail will make a formal announcement (likely followed by one more announcement once the deal actually closes in a few weeks/months).

 

[Jellybeans1000]

No it does not need to answer or comment on rumors be in the AFR or WSJ or LA Times. Very much not so. Same goes for rumors it is buying Smugglers Notch. Unless the rumor is impacting the share price, which in this case it is not, 99% of public companies would not comment on news / rumors / speculation / innuendo / postings on Pugski

Having said that, this seems like it is likely true so at some point - sooner rather than later - Vail will make a formal announcement (likely followed by one more announcement once the deal actually closes in a few weeks/months).

No it doesn't have to answer rumours here, but given it is the AFR, it is supposed to respond, as this probably would affect the share price, as most takeover bids do.

 

[LKLA]

No it doesn't have to answer rumours here, but given it is the AFR, it is supposed to respond, as this probably would affect the share price, as most takeover bids do.

Vail won’t make an announcement because of speculation on the Australian Financial Review, or any other source (Denver Post). And, it has not made an announcement, so it’s pretty clear what the answer is. You don’t have to believe me, just believe the facts. No response / announcement.

Or you can just look at what Vail itself stated when the Denver Post reached out for a comment: “We don’t comment on or speculate about acquisition rumors, said company spokeswoman Liz Biebl.”

When / if Vail does indeed close on a deal to buy a mountain, it will announce it via a corporate press release that is sent to the newswires, circlated to an email list, posted on its website and filed with the SEC. And it will do so because there is a deal, not as a response to an article in the Australian Financial Review. Until that time, Vail will not respond to an article in the Australian Financial Review about it buying a mountain in Australian, nor will they respond to speculation in the Vermont Digger that they want to buy Smugglers Notch. The same exact way Vail did not respond to similar news in the past - Triiple Peaks and Stowe are their two most recent acquisitions - no announcement until deals were closed.

 

[Jellybeans1000]

Vail won’t make an announcement because of speculation on the Australian Financial Review, or any other source (Denver Post). And, it has not made an announcement, so it’s pretty clear what the answer is. You don’t have to believe me, just believe the facts. No response / announcement.

Or you can just look at what Vail itself stated when the Denver Post reached out for a comment: “We don’t comment on or speculate about acquisition rumors, said company spokeswoman Liz Biebl.”

When / if Vail does indeed close on a deal to buy a mountain, it will announce it via a corporate press release that is sent to the newswires, circlated to an email list, posted on its website and filed with the SEC. And it will do so because there is a deal, not as a response to an article in the Australian Financial Review. Until that time, Vail will not respond to an article in the Australian Financial Review about it buying a mountain in Australian, nor will they respond to speculation in the Vermont Digger that they want to buy Smugglers Notch. The same exact way Vail did not respond to similar news in the past - Triiple Peaks and Stowe are their two most recent acquisitions - no announcement until deals were closed.

Which means they are still making an announcement. But legally they have to say the doing the deal at some point. Otherwise they have to say no they aren't doing a deal. They can respond whenever they like, they just have to yes or no at some point, when the deal is either done or not.

 

[LKLA]

Which means they are still making an announcement. But legally they have to say the doing the deal at some point. Otherwise they have to say no they aren't doing a deal. They can respond whenever they like, they just have to yes or no at some point, when the deal is either done or not.

With all due respect, it is rather puzzling why you insist on arguing about something that you seem to know little about.

Vail will make an announcement WHEN and IF there is a deal (one announcement upon striking the deal another upon the deal being completed). There has not been an announcement and there will not be one because the Australian Financial Review published an article. There will only be an official announcement, likely in the form of a press release - though that is not required (only a Form 8K is) - once lawyers have signed off and the deal is considered done.

Once again, I point you to the fact that days later Vail has yet to make an announcement, so it’s pretty clear what the answer is - just look at the facts. Or, you can read what Vail itself said: “We don’t comment on or speculate about acquisition rumors, said company spokeswoman Liz Biebl.” It does not get more clear!

That is very different than from what you have been mistakenly stating on this tread time and time again.

"...it has to answer these rumours in the AFR" - Wrong

"Apparently it is meant to be done when business closes in Colorado." - Wrong

"...given it is the AFR, it is supposed to respond,..." - Wrong

"...they are still making an announcement." - Maybe

"...legally they have to say the doing the deal at some point." - Wrong (at least not until the deal closes)

"...they have to say no they aren't doing a deal." - Wrong

"..they just have to yes or no at some point..." - Wrong (they don't have to respond at all if there is no deal)

"...when the deal is either done or not." - Wrong (they don't have to respond at all if there is no deal)

I again refer you to Vail's recent deals such as Triple Peaks, Stowe or Perisher. I did not follow the Perisher deal closely but did the other two and rumors / articles / innuendo / chatter were rampant not for days or weeks, but for months prior to any announcement from Vail, which only happened once the deals were finalized.

For Vail's sake lets hope that this gets shareholders excited because their stock has gone from $200 to $300 and back to $200 this year on the back of 8% pass sales growth.

 

[Jellybeans1000]

With all due respect, it is rather puzzling why you insist on arguing about something that you seem to know little about.

Vail will make an announcement WHEN and IF there is a deal (one announcement upon striking the deal another upon the deal being completed). There has not been an announcement and there will not be one because the Australian Financial Review published an article. There will only be an official announcement, likely in the form of a press release - though that is not required (only a Form 8K is) - once lawyers have signed off and the deal is considered done.

Once again, I point you to the fact that days later Vail has yet to make an announcement, so it’s pretty clear what the answer is - just look at the facts. Or, you can read what Vail itself said: “We don’t comment on or speculate about acquisition rumors, said company spokeswoman Liz Biebl.” It does not get more clear!

That is very different than from what you have been mistakenly stating on this tread time and time again.

"...it has to answer these rumours in the AFR" - Wrong

"Apparently it is meant to be done when business closes in Colorado." - Wrong

"...given it is the AFR, it is supposed to respond,..." - Wrong

"...they are still making an announcement." - Maybe

"...legally they have to say the doing the deal at some point." - Wrong (at least not until the deal closes)

"...they have to say no they aren't doing a deal." - Wrong

"..they just have to yes or no at some point..." - Wrong (they don't have to respond at all if there is no deal)

"...when the deal is either done or not." - Wrong (they don't have to respond at all if there is no deal)

I again refer you to Vail's recent deals such as Triple Peaks, Stowe or Perisher. I did not follow the Perisher deal closely but did the other two and rumors / articles / innuendo / chatter were rampant not for days or weeks, but for months prior to any announcement from Vail, which only happened once the deals were finalized.

For Vail's sake lets hope that this gets shareholders excited because their stock has gone from $200 to $300 and back to $200 this year on the back of 8% pass sales growth.

And then it needs to cleared by the ACCC, which will scrutinise the deal. That could be interesting.

If there is no deal, they will need to stop the speculation at some point, and make sure their shareholders know. Perhaps this isn't a thing in the US, so perhaps you are right. It is in Australia. But that is the procedure I am aware of.

 

[LKLA]

And then it needs to cleared by the ACCC, which will scrutinise the deal. That could be interesting.

If there is no deal, they will need to stop the speculation at some point, and make sure their shareholders know. Perhaps this isn't a thing in the US, so perhaps you are right. It is in Australia. But that is the procedure I am aware of.

I have NO IDEA regarding the requirements or protocol for something like this in Australia. I am extremely familiar with how things work here in the US. Ill leave it at that.

Vail may decide to say something next time a media outlet asks or next time management interacts with the investment community and they are asked about it. So far they have said "no comment", which is the phrase companies use 90% of the time in one form or another when asked about deals. Vail will not however address the issue to confirm or deny it pro-actively via a press release or a filing with the SEC at this point - at any point before the deal closes. The rare exception is if the stock is trading down significantly on false information / news - in that case a company may elect to pro-actively address the issue via a press release to stabilize the stock. But that does not seem to be the case here.

Vail has continued to push its growth story via acquisitions and a deal of some kind or other is likely to happen sooner than later. No doubt there. With Alterra coming into the picture and the added premium that the top 25 mountains now command valuation wise, Vail's inorganic growth story in the US has become much more challenging. They already overpaid for Whistler, so they likely don't want to do that again for another top 10-20 mountain. Going outside the US is a much more realistic option for them right now. We can constructively debate the pros and cons of that strategy!

If Vail does buy the resorts, I hope it is for the good of those resorts and the folks who ski and ride there. Hope they make the experience better (not implying it may not already be great).

 

[geepers]

Hmmm, I saw this posted by Unofficial yesterday but was scratching my head because I didn't get a press release. I am on the list to get press releases.
Maybe I'm no the naughty list now.

Meanwhile, what does this mean for skiers in Australia?
What does it mean for skiers who want to visit Australia?

There are 5 larger resorts in Australia.

• Thredbo, Perisher Blue - located in the state of NSW about 5 to 6 hours drive from Sydney, the closest major population center (about 5 million people)
• Falls, Hotham and Mt Buller - located in Victoria. Buller is about 2-3 hours drive from Melbourne. The other 2 are 4-5 hours from Melbourne (similar poluation).

They are all within a reasonable distance of regional airports for visitors from further afield, either Australia or overseas.

Generally people use the resorts in their home state. There would be some cross-over but it mostly just means further to travel - the resorts are kind of similar although Thredbo has the best vertical drop. (Got to be careful as there's a fair bit of misplaced resort tribalism...)

So it's a good move for Vail to tap into another large section of the Australian market. Not only locally but to steer those of us who like to ski overseas to the Vail resorts. Lift passes that work twice are getting harder to pass up.

It also broadens their appeal to travelers to Oz with the potential to experience two resorts on the one ticket. A week or so in each resort would be a pretty good skiing experience for many. Australia is subject to a lot more seasonal variability than most skiing countries however the resorts have invested heavily in snow making. China is expected to be a growing ski consumer market: 300 million skiers and 800 ski resorts to be seen in China by 2022

The good news is that it makes it much less likely that Vail will ever buy Thredbo which may have affected resort competition in NSW. Then again Vail's low priced season ticket business model is attractive and there's still plenty of 3rd party accomm and eating options.

 

[Ulmerhutte]

I now have an official press release from Falls Creek Resort Management stating the sale and handover will be completed by June 2019, subject to regulatory approval.

The future is unknown, ie whether Vail will be good for Falls Creek, but the current owner, Merlin Entertainments, did not do any favours for Falls skiers. Minimal investment, poor maintenance (leading to multiple and extended lift closures), and a degree of arrogance in the senior management ranks. I would like to think that Vail will care about their brand and things will start to improve. Let’s see.

 

[rcc55125]

http://news.vailresorts.com/corporate/fallscreekhotham.htm

 

[LKLA]

I think none of us are surprised at the news (it was not a well kept secret).

I am a bit surprised at how much Vail paid for FC and Hotham. They valued them almost on par with Whistler, and higher than Perisher (though Vail will argue that it is below where MTN stock is trading, so this should be considered an accretive deal).

Those in Aussie land likely know better, but it would seem Vail paid what it did because they feel that there is significant upside via synergies, cost cuts, operational improvements and overall potential for growth at those two resorts (typically see these benefits more in years two and three post-acquisition).

 

[Wasatchman]

Or they paid the high price to keep Alterra out of Australia. At this point, Vail more or less has Australia locked up.