Saudi Prince to Acquire 25% of Four Seasons for $122.1 Million

Strategic Insights -

The Canadian-owned Four Seasons Hotels chain has been acquired by a Saudi Arabian Prince for a significant stake. Prince Walid bin Talal, a billionaire with a reputation for savvy investments, has agreed to take a 25% ownership position in the company for $122.1 million. This move comes as luxury hotels are experiencing a resurgence in the industry, and Four Seasons has seen a steady rise in popularity due to its attentive service and high-end reputation.

Key Takeaways:

  • Prince Walid bin Talal, a billionaire born in 1954, will acquire 25% of Four Seasons Hotels for $122.1 million, with an additional $79 million investment to finance the company's expansion.
  • The Prince's investment in Four Seasons comes as luxury hotels are leading the industry's recovery from recession, with Four Seasons ranked a close second in customer satisfaction to the Ritz-Carlton hotels in the luxury category.
  • Prince Walid has taken significant stakes in other major Western companies, including Citicorp, Saks Fifth Avenue, and Euro Disney, and has become a major player in North America and Europe.
  • The Prince will also acquire one-quarter of Isadore Sharp, Four Seasons' chairman and founder, personal holdings for $22 (Canadian) a share, and the company will receive a contract to manage a hotel Prince Walid is developing in Riyadh.
  • The Four Seasons chain has increasingly avoided ownership in favor of joint ventures, limited partnerships, and minority investments, preferring the far less risky business of managing properties for a fee.
  • The company has been criticized for its accounting practices, including using Canadian accounting rules to issue quarterly profit-and-loss statements that do not show the financial weakness of many of its holdings.

Statistics:

  • 25% ownership stake: Prince Walid bin Talal will acquire a 25% majority stake in Four Seasons Hotels for $122.1 million.
  • Expansion financing: The Prince will provide $79 million (United States) to finance the company's expansion.
  • Number of properties: Four Seasons is a 44-property chain in 19 countries, including hotels in Manhattan, London, and Riyadh.
  • Unpaid dividend: The company has an unpaid dividend of $18.5 million, according to the report by Howard M. Schilit, an accounting professor at American University.

Sources:

  • New York Times, "Saudi Prince Invests in Four Seasons Hotels", April 7, 1994.
  • Four Seasons Hotels and Resorts, "About Us" webpage.
  • Reuters/Bettmann, "Saudi Prince Acquires 25% Stake in Four Seasons".