ME-based American Skiing Co. (ASC) announced plans
yesterday to merge with MeriStar Hotels & Resorts, the
nation's "biggest independent hotel management company,"
according to Tux Turkel of the Portland PRESS HERALD. As
part of the deal, ASC will be renamed Doral Int'l, and its
HQs will move from ME to DC. The deal "could close early
next year if approved by federal regulators." ASC said that
the merger "won't result in job losses" for the company's
approximately 11,000 employees and that customers "shouldn't
notice any changes at the resorts this season." The
combined company "would have assets totalling more than"
$1.2B, including nine ski resorts, 23 resort hotels, 246
hotels, 15 golf courses, four conference facilities and
other real estate holdings. Doral Int'l would have four
major business units, and the largest, Doral Leisure,
includes the ski resorts. Under the merger plans, ASC
Founder & CEO Les Otten would become Chair of Doral Int'l
and MeriStar Chair & CEO Paul Whetsell would become CEO.
Under the "all-stock deal," valued at about $185M, MeriStar
shareholders will receive 1.88 shares of Doral Int'l for
each share of MeriStar (Portland PRESS HERALD, 12/12). In
Boston, Greg Gatlin writes, "The heavily leveraged [ASC]
could benefit from access to the 18 million customers that
visit MeriStar properties each year." Otten's "aggressive
expansion and real estate development, coupled with untimely
warm and dry weather, left [ASC] loaded with debt." Otten's
new role will be "more in strategic planning," as he will
control less than 10% of the merged company. Whetsell will
lead the new company (BOSTON HERALD, 12/12).
WHAT IT MEANS: The AP's Jerry Harkavy wrote, "Parties
to the merger hailed it as a way to ease the seasonal
fluctuations of the ski business by combining it with a
segment of the hospitality industry that provides consistent
cash flow and is not dependent on weather." Whetsell said
that the "focus will be on improving market share, reducing
expenses and improving margins" (AP, 12/11). MeriStar COO
John Emery: "This was the best opportunity to create a
dominant resort and leisure brand in the industry. Doral
will have the best services. Instead of creating it one
resort at a time, we're creating the dominant brand
immediately" (WASHINGTON POST, 12/12). MeriStar is
"expected to hold" 32-39% of the new company, with the
remainder belonging to ASC (TAHOE TRIBUNE, 12/12). MeriStar
closed yesterday at $2.69, up 19%, while ASC dropped $0.75,
or 27%, to close at $2. This morning, shares of ASC are
down another 6% to $1.88 (THE DAILY).
