Intrawest sells off Mammoth
October 5, 2005
On a day when Vail Resorts reported particularly sunny year-end financial numbers, rival resort operator Intrawest announced the finalization of the sale of Mammoth Mountain Ski Area in California to Starwood Capital Group Global, LLC.The Wednesday announcement wasn’t surprising – the resort was put up for sale by Intrawest earlier this year, and more than 10 bidders were reportedly interested in buying. What was a surprise was the value assigned to the sale: Starwood bought Mammoth at a reported value of $365 million, which is 11 to 12 times trailing EBITDA, a measure of a company’s general profitability.Intrawest’s pre-tax profit from the sale was reported to be around $101 million.As a comparison, the last major ski resort to trade hands – Heavenly Ski Resort, which Vail Resorts snapped up in 2002 – traded at 6 to 7 times trailing EBITDA.The question of whether Vail Resorts may try to capitalize on the increased valuations across the industry by putting one or more ski resorts up for sale was posed to chief executive officer Adam Aron during Wednesday’s conference call announcing Vail Resorts’ year-end numbers, but he appeared to distance the company from that possibility.”I don’t think so … but my view has always been, ‘never say never about anything,'” Aron said. “We are smart and opportunistic people, but the ski resort business is our absolute central and core business.” He continued, “I don’t think we’re going to put any of our ski resorts on the block, but I would like to think that the public markets will give us proper valuation for those resorts given the recent comparable.”When asked if Vail Resorts was ever in the running to be the winning bidder to buy up Mammoth, Aron cited Intrawest’s right of first refusal as a major reason Vail was never seriously in the bidding.Intrawest owns Copper Mountain Resort, and operates Winter Park Resort for the city of Denver, in addition to operating major ski resorts in both the eastern and western United States and Canada. Intrawest trades on the New York Stock Exchange under the symbol IDR, and was down almost 4 percent on the recent news as of press time.