What happened
Shares of Vail Resorts (MTN 2.64%) climbed 10.5% in July, according to data from S&P Global Market Intelligence. Virtually all of last month's jump came after the mountain resort operator revealed it has agreed to acquire fellow resort leader Peak Resorts (SKIS +0.00%) for $11 per share -- or a total purchase price of roughly $264 million -- through a combination of cash and debt.
So what
For perspective, as it stands, Vail Resorts operates 17 mountain resorts and three urban ski areas. But the purchase of Peak Resorts will bring 17 additional ski resorts under Vail's wing, primarily located in the Northeast, Mid-Atlantic, and Midwest regions.
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"We are incredibly excited to have the opportunity to add such a powerful network of ski areas to our company," stated Vail Resorts chairman and CEO Rob Katz. "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."
Now what
As for specific financials (aside from the purchase price), Peak Resorts should generate incremental EBITDA of roughly $60 million in Vail's fiscal year ending July 31, 2021 -- that is, the first fiscal year expected to record the full benefit of synergies from the acquisition stemming from new revenue opportunities, cost reductions, and the greater efficiency of Vail Resorts' larger scale. Vail also predicts "additional revenue upside in future years."
Of course, the purchase first needs to secure the approval of both regulators and Peak Resorts' shareholders. But assuming all goes as planned, Vail anticipates the ink will be dry on the deal by this fall.
