SYDNEY (Reuters) - New York-listed Vail Resorts (MTN.N) on Tuesday said it would buy the largest mountain resort in Australia for $136 million, in its first international acquisition.
The Perisher ski resort in New South Wales state is the largest and most-visited ski resort in Australia, with easy road access to the major cities of Sydney and Melbourne, it said.
Vail is looking to tap into traveling Australian skiers by offering Perisher customers free season passes to its U.S. resorts, while also luring North American skiers to Australia.
Australia is an important international market for ski resorts across the northern hemisphere, generating an estimated more than 1 million visits annually to resorts in North America, Japan and Europe, Vail said.
“The acquisition of Perisher creates an incredibly exciting connection between Australian skiers and riders and our mountain resorts in the United States,” Vail Resorts chief marketing officer Kirsten Lynch said in a statement.
But the acquisition, expected to close in the fourth quarter of fiscal 2015, comes at a time when climate scientists have cast doubt on the future of Australia’s A$1.8 billion ($1.38 billion) ski industry, with seasons predicted to be shorter and snow coverage thinner as early as 2020.
Australian resort operators often have to manufacture snow in the busiest months of June and September.
Located in the Kosciuszko National Park, Perisher resort has over 3,000 acres (1,214 hectares) of skiable terrain across 7 mountain peaks.
Vail said it expected Perisher to generate about $6 million of free cash flow in its first year of operations, after deducting capital expenditures at the resort, income taxes and all interest expense relating to the acquisition.
These estimates did not include the potential benefit of increased visits to its U.S. resorts.
($1 = 1.3077 Australian dollars)
Editing by Stephen Coates