By Svea Herbst-Bayliss
NEW YORK, Oct 30 (Reuters) – Vail Resorts won support on Friday from its largest investor as it faces increasing pressure from activist Oasis Management to make operational changes including the possible sale of some mountain assets.
Ron Baron said in a statement his firm Baron Capital, which owned 18% of Vail’s stock at the end of June, will back Vail’s management at next month’s boardroom election and will vote for Vail Resorts’ nominees.
Baron added that he believes Vail CEO Rob Katz “has the right strategy to return to sustainable earnings growth.”
BOARDROOM FIGHT
Vail, which owns mountain resorts and ski areas in Utah, Colorado and the northeastern United States, is facing off against Oasis, an activist investor and Vail’s fourth-biggest shareholder with a 9% stake at the end of September, in one of the year’s most contentious boardroom fights.
Oasis wants changes, including the possible sale of some mountain assets, and in September nominated four director candidates, including former Olympic ski champion Picabo Street and former Walt Disney CEO Bob Chapek.
Vail, which has a market value of $5 billion, is urging investors to vote for its nine directors and argues its multi-year transformation strategy, dubbed “Epic Experience”, will pay off. It has already made changes like upgrading its quick service menu items, improving ticket purchasing and offering advance purchase discounts. It has also upgraded its ski school and lessons.
‘SHORT-SIGHTED’ EFFORT
Since January, Vail’s stock price has climbed 13% and is trading at $151.37 on Friday. But over the last five years, the stock tumbled nearly 50% and the company said last month that full fiscal-year profit nearly halved compared with a year earlier. Record low snowfall brought fewer guests to Vail’s mountains and has weighed on earnings.
Baron also referenced a simmering fight around billionaire tech company Cloudflare Chief Executive Matthew Prince, who has been pushing to buy Park City Mountain Resort from Vail.
“I also have serious concerns about Oasis’ coordination with Matthew Prince,” Baron wrote, adding he views Prince’s effort to have Vail sell him Park City as “short-sighted and destructive to long-term shareholder value.”
A representative for Oasis said: “It’s not surprising that the board would try to distract shareholders from their poor performance by making misleading statements — from false accusations about coordination to asserting that the board has done a great job. We continue to believe in the value of the assets and the need for board refreshment.”
Prince could not be reached for comment.
(Reporting by Svea Herbst-Bayliss; Editing by David Holmes)
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