Intrawest Agrees to Be Bought

The deal is valued at $2.8 billion, including debt. Activist holder Pirate Capital supports the move.
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Updated from 9:32 a.m. EDT

Intrawest

(IDR)

, an operator of ski resorts like British Columbia's Whistler Blackcomb and Vermont's Stratton Mountain, said Friday it agreed to be bought in a deal worth $2.8 billion.

Fortress Investment Group, a private equity firm with about $23 billion in equity capital under management, will acquire Intrawest for $35 a share, a 32% premium to its Thursday closing price. Intrawest has traded in a range of $23.19 to $37.69 in the last year.

Shares of Intrawest surged 29% to $34.31 in morning trading Friday. The total value of the transaction includes Intrawest's existing debt.

"Following a thorough review of all strategic options to maximize value for Intrawest's shareholders ... the board of directors of Intrawest has determined that the transaction with Fortress is the best alternative for the shareholders and is in the best interests of the company," Gordon MacDougall, lead director of Intrawest, said in a statement.

In recent months, the company had been

pressured by activist hedge fund Pirate Capital to sell itself or shed assets to unlock value.

Pirate Capital had originally said it felt the company was worth $45 per share or more, but told

TheStreet.com

Friday that it supported the Fortress deal.

"We're very happy with the $35 offer," says Stephanie Tran, an analyst with Pirate Capital. "We think the board of directors and Intrawest management, led by Joe Houssian, ran a very thorough and deep process."

She says the $45 figure was a 12-month target for the stock based on future earnings. The $35 price is the discounted present value of that target, Tran says.

Pirate owns about 8.9 million shares of Intrawest, or about 18% of the company. It stands to be paid about $312 million. Tran declined to provide Pirate's average purchase price for Intrawest but said the fund stands to make good money on the deal.