Sharp stares down opponents

Isadore Sharp, the entrepreneur who has fashioned an international luxury brand from a single Toronto hotel, managed -- but just barely -- to stare down investor opposition yesterday and secure approval for the only deal he was willing to back.

In a small meeting room in Toronto's Four Seasons Hotel, Mr. Sharp sat tight-lipped and silent as minority investors endorsed by the slimmest of margins the $3.4-billion (U.S.) sale of his company to two of the world's richest men.

In the end, a mere 344,200 votes were all that separated Mr. Sharp's vision for the future of Four Seasons Hotels Inc. from a very public trouncing that likely would have sent the stock and its founder's strategy into freefall. "It's a very long process," a visibly relieved Mr. Sharp said following the vote.

The deal passed with support from 51.85 per cent of minority shareholders, just squeaking over the required majority threshold.

The deal also required the approval of two-thirds of all shareholders and 69 per cent voted in favour.

At a time when hedge funds and activist shareholders have grown accustomed to wringing extra dollars out of most buyers, Mr. Sharp played hardball and won, saying that the offer from his long-time backer Saudi Prince al-Waleed bin Talal and Microsoft's Bill Gates was the only one he would support.

Only after the half-hour meeting had ended and well-wishers lined up to embrace him did the poker-faced Mr. Sharp manage a smile.

He refused to make any comment on the sale and spoke at the meeting only to introduce Four Seasons' lead director, Robert Prichard. There was no last-minute pitch to investors to support his vision, no justification of the deal, and no thanks for support when the transaction was approved.

A vote, which blessed the passing of another prominent Canadian public company into private ownership and foreign hands, took place without a single question from shareholders and no sense of occasion. In a break while the ballots were counted, Mr. Sharp was overheard telling one of the 70 or so people in attendance that he had trouble sleeping the night before.

"It's kind of sad to see a corporation such as this disappear from our shareholder experience," said John Haapala, an individual shareholder who has owned Four Seasons shares for about a decade. "It's as if we're losing a large Canadian corporation to a foreign-owned entity. That's what it feels like."

Mr. Haapala would not say how he voted, but lamented that it will be hard to find a replacement for Four Seasons. His broker has suggested Tiffany's. "There aren't many in this category. More and more of them have gone private. It's a very smart move on their part."

Kathleen Taylor, president of Four Seasons' worldwide business operations, gave no indication whether Mr. Sharp and his staff knew how razor-thin their margin of victory would be. "You didn't know until the count was done," she said after the meeting.

"An overwhelming number of our shares have been voted in this process, and we are pleased that the required majorities were achieved," Mr. Sharp said in a brief statement issued after the meeting.

"My sense was it's been close for days," said Gerald Sheff, chairman and CEO of Gluskin Sheff + Associates Inc. "But 52 to 48 is still a four-percentage-point spread, and you only need one vote."

Mr. Sheff, whose firm has held Four Seasons stock, said the opposition likely came from shareholders who did not feel they could replace the investment. "I'm a great fan of Issy's. There are other people who've made more money, but nobody [in Canada] has created a global brand like he has."

Under the agreement, which still requires court approval, Mr. Sharp will remain as chairman and chief executive officer and keep a 10-per-cent interest.

The deal had been considered a sure thing because Mr. Sharp had made it clear this was the only sale he would support. Although Mr. Sharp controls the company through super-voting shares, the sale required the approval of minority shareholders not involved in the transaction, meaning that Mr. Sharp, Mr. Gates and Prince al-Waleed could not take part in this critical vote.

Late last month it became clear that the sale could run into trouble when Four Seasons disclosed that one minority shareholder opposed the sale. Shares of Four Seasons fell sharply a week ago as speculation mounted that others would follow.

Following the transaction, which is expected to be completed this quarter, Four Seasons will be owned by affiliates of Cascade Investment LLC, Mr. Gates' company; Kingdom Hotels International, a company owned by a trust created for the benefit of Prince al-Waleed and his family; and Mr. Sharp.

The Four Seasons empire, founded in 1961 with one hotel in Toronto, now controls a chain that manages 71 luxury hotels in 31 countries. Prince al-Waleed is a long-time business associate of Mr. Sharp's and, prior to the proposal to take Four Seasons private, held 22 per cent of the company.