RIYADH: Kingdom Holding Company’s decision to sell half its shares in the Four Seasons hotel chain to Bill Gates’ Cascade Investment LLC was taken to generate a return for investors, CEO Talal Al-Mayman said in an interview with Al Arabia.
The proceeds from the deal, expected to close in January 2022, will be used to make fresh investments, increase Kingdom Holding’s positions in some of its existing investments, and pay down some debt, he said.
Kingdom Holding announced in a bourse filing on Tuesday that one of its subsidiaries has signed an agreement to sell half of its stake in Four Seasons, equivalent to 23.75 percent, or SR8.29 billion ($2.21 billion), and retain the other half of its stake in the hotelier. It expects to post a gain of SR5.9 billion, the company said.
The value of the deal is fair in view of the expected recovery of the hospitality sector from the coronavirus pandemic, Al-Mayman told Al Arabiya.
The transaction values Four Seasons at $10 billion. Cascade’s stake will increase to 71.25 percent.
Four Seasons was taken private in 2007 in a deal led by Cascade and Kingdom Holding, the company founded by Saudi billionaire Prince Alwaleed bin Talal. The new owners invested in the company’s expansion, opening properties in new markets and capitalizing on a boom in luxury travel.
Four Seasons managed 74 hotels when Cascade and Kingdom Holding took it over and now operates 121 properties, with a further 50 under development. It has also expanded its business into real estate, putting its name to luxury homes and communities.
Other recent deals by Kingdom Holding include a $270 million stake in music streaming service Deezer and the sale of its holding in Rotana Music to Warner Music Group in February 2021.
Due to the rise in global markets, Kingdom Holding has become more cautious in making investment decisions, he said.
Timing is not the basis for making investment decisions, but rather the return on investment, the added value for investors, and profits, Al-Maiman said.