American Skiing halts merger

PORTLAND – Ski resort operator American Skiing Co. and hotel manager MeriStar Hotels & Resorts dropped 3-month-old plans to merge amid concerns from minority shareholders and worries about obtaining the financing necessary to operate the combined company.

The companies unexpectedly disclosed Friday that their boards had called off the deal as American Skiing’s shareholders were poised to vote on it.

American Skiing planned to acquire MeriStar for stock valued at $185 million when the deal was announced Dec. 11. It said the deal would help it reduce the seasonal fluctuations of the ski business by combining it with a hotel and resort operator whose business isn’t weather-dependent.

But shareholders, senior lenders and bondholders all expressed concerns, said Skip King, spokesman for American Skiing in Newry.

“The deal just never made sense because the concept of becoming a four-season company might sound good, but in reality the lodging industry is just as cyclical as the skiing business,” said Brad McCurtain, president of Maine Securities.

Also, American Skiing’s minority shareholders were concerned when MeriStar failed to meet analysts’ expectations in the fourth quarter while American Skiing was launching its best ski season in years, he said.

American Skiing’s ski resorts include Steamboat in Colorado, Killington in Vermont, and The Canyons in Utah. Washington-based MeriStar owns 113 full-service hotels in 27 states, the District of Columbia and Canada.

The combined company would have had assets totaling more than $1.2 billion, including nine ski resorts, 23 resort hotels, 246 hotels, 15 golf courses and four conference facilities, the companies said.

But both companies now believe they’re better off on their own, said Les Otten, American Skiing’s chairman and chief executive.

“Each company has reached the conclusion that pursuing operations on a stand-alone basis is more attractive to its shareholders than consummation of the merger,” Otten said in a statement.

In late trading Friday on the New York Stock Exchange, American Skiing shares soared 37 percent, or 42 cents a share, to $1.55 while MeriStar shares edged up 1 cent to $1.81.

The last-minute decision by the boards to call off the deal Thursday meant there was no need for Friday’s planned meeting of American Skiing shareholders at the Sunday River resort. A meeting of MeriStar’s shareholders scheduled for Monday also was canceled, the companies said.

The deal called for American Skiing to issue 1.88 shares for each MeriStar share and rename the combined company Doral International Inc., with headquarters in Washington, D.C.

When it was announced, Otten said the deal would create a “new leader in the year-round leisure business.”

It followed what Otten said had been the two worst winters in memory for American Skiing. Since the company went public three years ago, its stock has tumbled from an initial price of $18 a share. The stock closed at $1.50 on Friday on the New York Stock Exchange.

American Skiing’s other ski resorts include Mount Snow and Sugarbush in Vermont; Sugarloaf-USA in Maine; Attitash Bear Peak in New Hampshire, and Heavenly in California-Nevada.