Feds clear proposed acquisition of Intrawest
July 12, 2017
The proposed acquisition of Intrawest Resort Holdings by affiliates of Aspen Skiing Co. and KSL Capital Partners passed a big test recently when federal agencies cleared the deal to move forward.
The U.S. Department of Justice and the Federal Trade Commission determined the proposal does not warrant a deeper look at antitrust issues at this time.
The parties in the transaction were required by the Hart-Scott-Rodino Antitrust Improvements Act of 1976 to notify the agencies of the proposed $1.5 billion acquisition after it was announced in April. The act requires a 30-day waiting period during which the agencies determine if they will require more information "about the likelihood that the proposed transaction would substantially lessen competition," according to the FTC website.
That waiting period expired in June without what's known as a "second request" for information, according to a notice posted on Intrawest's website June 24.
"Expiration of the waiting period under the HSR Act satisfies one of the conditions to the closing of the pending merger," the company said.
Aspen Skiing Co. spokesman Jeff Hanle said the waiting period expired for the proposed acquisition of Mammoth Resorts, as well. Mammoth is a privately held company.
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The FTC's website said the agency reserves the right to challenge acquisitions even after they are consummated if it feels competition in an industry has suffered.
The Federal Trade Commission and Department of Justice allow the vast majority of merger transactions to move ahead. There were 1,801 major transactions reported in the federal government's fiscal 2015, according to an FTC report. The agencies made a second request for information in 48 cases.
The FTC made 22 merger enforcement challenges, including 17 that resulted in negotiated settlements.
"These enforcement actions preserved competition in numerous sectors of the economy, including consumer goods and services, pharmaceuticals, healthcare, high-tech and industrial goods and energy," the report said.
The Department of Justice's Antitrust Division challenged another 20 merger transactions.
The agencies don't disclose if any complaints are made about proposed acquisitions, so it is not known if rivals in the ski industry objected to Skico's acquisition of Intrawest or Mammoth.
Skico's' buying binge shocked many in the ski industry. Some observers contend it will increase competitiveness, because now, Aspen's consortium will have the power to challenge Vail Resorts. Other observers said consumers would eventually be hurt by higher prices.
Aspen Skiing Co. and KSL teamed to go on their buying binge in April. First came the blockbuster with Intrawest, a publicly traded company.
The Crown family, owners of the privately held Aspen Skiing Co., wanted to cherry pick portions of Intrawest after the company was put on the block, according to documents Intrawest filed with the U.S. Securities and Exchange Commission. The Crowns wanted to buy Steamboat and Intrawest's long-term management agreement for Winter Park. They also coveted the Canadian Mountain Holidays heli-skiing business. The Crowns made a non-binding offer for between $941 million and $1.129 billion. The offer was rejected by Intrawest's board of directors Feb. 16.
Meanwhile, KSL Capital Partners was invited to "round two" of the bidding process. KSL and Skico teamed on Feb. 22 to pursue the purchase of Intrawest's six ski resorts, according to the preliminary information statement filed with the SEC.
Skico and KSL were already wed in a partnership to acquire Snowmass Base Village, along with development firm East West Partners.
Intrawest's board of directors accepted the Skico-KSL offer April 8, and it was announced two days later. The deal is expected to be completed by the end of the third quarter of this year.
Two days later, the partners struck again. Skico and KSL acquired Mammoth Resorts' four ski areas for an undisclosed amount.
Another condition vital to the deal is the transfer of the permits for the ski areas that use national forestlands. The Forest Service's Rocky Mountain Region office is performing a financial ability determination to ensure the potential new owners of Steamboat Ski Resort have the financial resources to be a viable and sustainable permit holder, according to Don Dressler, mountain resort program manager for the Rocky Mountain Region. He is coordinating efforts with counterparts in the Pacific Southwest Region, which oversees the Mammoth ski areas.
The Forest Service is also making sure all permit conditions and terms are up to date before transferring them, he said.
The plan is to coordinate the transfer of the permits with the sale, according to Dressler.
Even if the sales go through prior to ski season, Skico officials have said there won't be any major changes this season. The Aspen group of resorts won't be in position to offer a joint pass to rival Vail Resort's Epic Pass in 2017-18, Skico officials have said.