Vail Resorts expands into Europe with planned takeover of Swiss resort
Company enters into an agreement to purchase a majority stake in Andermatt-Sedrun Sport AG
Vail Resorts is expanding into Europe. The operator of 40 resorts across North America and Australia announced late Sunday that it has entered into an agreement to purchase a majority stake in Andermatt-Sedrun Sport AG from Andermatt Swiss Alps AG, marking the Colorado-based company’s first strategic investment in a ski resort in Europe.
Andermatt-Sedrun is a renowned destination ski resort in central Switzerland, located less than 90 minutes from three of Switzerland’s major metropolitan areas — Zurich, Lucerne and Lugano — and approximately two hours from Milan, Italy.
The move comes just days after Vail Resorts Chief Financial Officer Michael Barkin, during a formal presentation to investors, said the company will continue to focus its capital allocation on more acquisitions.
According to a news release, Vail Resorts is acquiring a 55-percent ownership stake in Andermatt-Sedrun Sport AG, which controls and operates all of the resort’s mountain and ski-related assets, including lifts, most of the restaurants and a ski school operation. ASA will retain a 40-percent ownership stake in Andermatt-Sedrun Sport AG, with a group of existing shareholders comprising the remaining 5% ownership.
“Entering the European ski market has been a long-term strategic priority for Vail Resorts,” said Vail Resorts CEO Kirsten Lynch in the company’s release. “We are excited to be partnering with ASA and investing our capital and resources to support the ongoing development of Andermatt-Sedrun into one of the premier alpine destination resorts in Europe, with integrated operations in lifts, food and ski school.”
Vail Resorts said in its release that Andermatt-Sedrun is one of the most ambitious resort development opportunities in Europe. Since originally investing in the resort in 2007, ASA’s majority shareholder, Samih Sawiris, has invested the equivalent of nearly $1.4 billion into the surrounding base area and over $160 million into the ski resort, creating one of the leading luxury resorts in Switzerland. ASA’s extensive investments in high-end lodging in the base area include The Chedi Andermatt, a world class 5-star luxury hotel, the Radisson Blu Reussen, luxury condos, studios and apartments, as well as the development of a concert hall, an 18-hole championship golf course and three Michelin star restaurants.
Vail Resorts’ investment — around $160 million — comprises a nearly $118 million investment into Andermatt-Sedrun Sport AG for use in capital investments to enhance the guest experience on the mountain and a nearly $42 million investment which will be paid to ASA and fully reinvested into the real estate developments in the base area. Vail Resorts will assume operating and marketing responsibility for Andermatt-Sedrun Sport AG, with ASA and local stakeholders continuing as key members of the board of directors.
“The extensive investments that ASA and the Sawiris family have made in both the base area and the mountain have created a high-end experience with significant capacity for growth from guests from Switzerland, the United Kingdom, other parts of Europe and around the world,” Lynch added. “We plan to rely heavily on, and learn from, our partners, community members and the Andermatt-Sedrun team as we gain experience and understanding of the resort, its guests and operations.
She continued: “We are proud to add this incredible Swiss destination to our network of world-class resorts and to welcome Vail Resorts’ Epic Pass, Epic Day Pass and Epic Local pass holders to experience the resort’s charming villages, Alpine terrain and extensive amenities as we look to create an even stronger offering for skiers and riders in Europe.”
The SkiArena Andermatt-Sedrun offers over 74 miles of varied terrain and a top elevation of 3,000 meters across the mountains of Andermatt, Sedrun and Gemsstock, with connected access to Disentis, which is owned independently. The ski area spans over 10 miles of scenic high alpine terrain between Andermatt and Sedrun, including the iconic Oberalp Pass, and is connected by the Matterhorn Gotthard Bahn that operates year-round.
Vail Resorts’ capital investment will be utilized for strategic projects that will significantly enhance the guest experience by increasing uphill capacity with lift upgrades and replacements; improving the quality of the snow surface through snowmaking upgrades; and improvements and expansions to dining outlets on-mountain. The partners anticipate working closely with local municipalities and stakeholders on the capital investment plans to secure the requisite approval and permits for the resort improvements.
“Vail Resorts is the ideal partner for our goal of developing Andermatt into The Prime Alpine Destination,” said Samih Sawiris, majority owner of ASA. “With Vail Resorts’ additional capital investment in the resort, deep expertise in successful operations of integrated mountain destinations, and the company’s impressive marketing capabilities and destination guest reach, Vail Resorts will provide a significant boost to the development of Andermatt-Sedrun.”
The transaction is expected to close prior to the 2022-23 ski and ride season, subject to certain third-party consents. Subject to the timing of closing, Vail Resorts plans to include unlimited and unrestricted access to Andermatt-Sedrun on the 2022-23 Epic Pass. Epic Day Pass holders with All Resorts Access will be able to use any of their days at Andermatt, and Epic Local Pass holders will receive five days of unrestricted access to the resort. The Epic Pass also provides European access to partner resorts including five days at Verbier4Vallées in Switzerland, seven days at Les 3 Vallées in France, seven days at Skirama Dolomiti in Italy and three days at Ski Arlberg in Austria, with specific details available at http://www.epicpass.com.
Subject to closing adjustments, the pre-investment valuation for the full resort is expected to be more than $230 million, including nearly $58 million of debt that will remain in place, with Vail Resorts acquiring a 55-percent equity ownership stake.