Saudi Prince Alwaleed’s Kingdom Holding Co. (KHC), Riyadh, signed a definitive agreement to sell half of his interest (23.75%) in Four Seasons Hotels and Resorts to an affiliate of Bill Gate’s Cascade Investment, its long-term investment partner in Four Seasons, taking Cascade’s stake from 47.5% to a controlling 71.25%.
The all-cash deal is being concluded on the basis of an enterprise value for Four Seasons of US$10 billion with cash proceeds to KHC of US$2.21 billion. KHC is expected to report a gain from the transaction of approximately US$1.57 billion. Four Seasons Founder and Chairman Isadore Sharp, through Triples Holdings Ltd., will retain his 5% stake.
“We have been investors in Four Seasons for the past 25 years and this transaction provides the opportunity to unlock some of the value we helped create with our partners whilst continuing to hold a strategic minority to capture the future growth of the company and support it in its next phase,” Kingdom Hotel Investments CEO Sarmad Zok told HOTELS on Wednesday.
Cascade further stated it is committed to providing Four Seasons with the resources to accelerate growth and expand its strategic goals.
The deal is expected to close in January 2022, and following the transaction, an affiliate of KHC will continue to own a 23.75% stake in Four Seasons and will continue to support the company and its growth opportunities through KHC’s ongoing representation on the board of directors and its ownership of Four Seasons-branded properties. Among KHC-owned assets is the Four Seasons George V in Paris. Today, Four Seasons has 121 hotels and resorts and 46 residential properties in 47 countries with over 40,000 employees.
“As we mark our 60th anniversary and look back on the profound impact that Four Seasons has had on luxury hospitality we also look forward with tremendous excitement and confidence in the future of the industry,” said Four Seasons CEO John Davison. “The unwavering support and partnership of our shareholders has and continues to be critical as we capitalize on growing opportunities to serve luxury consumers worldwide.”
KHC’s involvement with Four Seasons dates from 1994 when it acquired a strategic minority interest via a partial public take-over bid. KHC assisted Four Seasons’ strategic growth plans by acquiring and developing numerous international luxury hotels for the brand.
Since 2007, Four Seasons has been owned privately by an affiliate of KHC, an affiliate of Cascade Investment, a private investment entity that holds the assets of Bill Gates, and Isadore Sharp, the founder of Four Seasons.
Known as one of the largest investment firms in the world, KHC’s holdings include leading market segments such as ride sharing, e-commerce, digital services and social media (Lyft, Uber, Careem, JD.com, Twitter, Deezer), banking and financial services (Citigroup, Saudi Fransi Bank).
Avington Financial Ltd., London, acted as exclusive financial advisor and Hogan Lovells as legal advisor to Kingdom Holding Co. in connection with the transaction.
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Mario Candeias
September 9, 2021 at 12:29 pmAlways interesting to see how information is ‘polished’, with all sides singing victory and wisdom.
What seems to have happened here is that Gates bought an additional 23,75% at a huge discount, as they are awash with cash, from stellar dividends from Microsoft during pandemic and under Satya Nadella.
Also, as inflation is going up, moving away from cash and hedging on real estate makes sense.
Plus, peers are trading way below market highs, meaning comparables helped bring the purchase price/transaction value down.
So, it was opportunistic for Cascade & Gates. Good for them.
For Al-Waleed’s Team, seems they bit the dust, as they are the (relatively) ‘weak’ partner in this. They get some cash, pay down debt and/or go into other sectors, as they could mostly never see a dime from this investment.
A trophy asset that has not been very tasty for both Cascade and KHC since inception, although Cascade can fare it better and does not have a political issue (like the one in Saudi Arabia) to deal with.
For Izzy Sharpe, always good… he keeps his 5%, keeps his 2 prestige (and deep-pocket) trophy partners, while still surfing the wave he created. Good for him.
Would be nice, for the advancement of the corporate hospitality industry, if journalists stop copy/pasting press releases and go deeper into the behind-the-scenes… why aren’t they asked, for example:
a) what was the HPR (Holding Period Return) of this investment for both sides?
b) was it positive in absolute and relative terms (nominal and real)?
c) was it above Cost of Capital?
d) was it accretive to share value? By how much?
e) relative to peers, did it outperform or underperform?
f) what was the impact in the risk/return portfolio profile of both Cascade and KHC?
One of the many issues in our industry is that Hospitality & Tourism Media are still technically not well prepared. Certainly it is an area of opportunity all of us will benefit from, if pursued.
Jeff Weinstein • Post Author •
September 9, 2021 at 3:14 pmThank you, Mario, for your candid comments. No excuses, but it is generally very difficult to get certain groups to answer those types of questions. I will pursue, however.