Vail Resorts, Inc., which operates Mt. Sunapee, has entered into a merger agreement to acquire 100 percent of the outstanding stock of Peak Resorts, Inc. at a purchase price of $11 per share, subject to certain conditions, including regulatory review and Peak Resorts' shareholder approval. Through the acquisition, Vail Resorts will add 17 U.S. ski areas to its network including Attitash Mountain Resort, Wildcat Mountain and Crotched Mountain in New Hampshire; Mount Snow in Vermont and several others in the east and Midwest.
The aggregate purchase price for all Peak Resorts common stock is estimated to be approximately $264 million (calculated on a treasury method basis), which Vail Resorts intends to finance through a combination of cash on hand, its existing revolver facility and an expansion of its existing credit facility. In addition, Vail Resorts will be assuming or refinancing Peak Resorts' outstanding debt.
"We are incredibly excited to have the opportunity to add such a powerful network of ski areas to our Company," said Rob Katz, chairman and CEO of Vail Resorts. "Peak Resorts' ski areas in the Northeast are a perfect complement to our existing resorts and together will provide a very compelling offering to our guests in New York and Boston. With this acquisition, we are also able to make a much stronger connection to guests in critical cities in the Mid-Atlantic and Midwest and build on the success we have already seen with our strategy in Chicago, Minneapolis and Detroit. The acquisition fully embodies our philosophy of Epic for Everyone, making skiing and riding more accessible to guests across the U.S. and around the world."
When the transaction closes, the 2019-20 Epic Pass, Epic Local Pass and Military Epic Pass will include unlimited and unrestricted access to the 17 Peak Resorts ski areas. Guests with an Epic Day Pass will also be able to access the new ski areas as a part of the total number of days purchased. For the 2019-20 season, Vail Resorts will honor and continue to sell all Peak Resorts pass products, and Peak Resorts' pass holders will have the option to upgrade to an Epic Pass or Epic Local Pass, following closing of the transaction.
Synergies are expected to come from additional revenue across the Vail Resorts network of resorts and cost reductions from the elimination of certain duplicative administrative functions and greater efficiencies brought by Vail Resorts' size and scale. Vail Resorts' annual ongoing capital expenditures are expected to increase by $10 million to support the addition of the Peak Resorts ski areas. After closing of the transaction, Vail Resorts plans to invest approximately $15 million over the next two years in one-time capital spending to elevate the guest experience at these resorts.
The transaction was approved by both companies' Boards of Directors, and the Peak Resorts Board of Directors also recommends that Peak Resorts' shareholders approve the transaction, which is expected to close this fall. The parties expect operations at all Peak Resorts ski areas to continue in the ordinary course of business. Upon closing, Vail Resorts plans to retain the vast majority of each resort's employees.