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With the acquisition of Regent Hotels, Four Seasons instantly expanded from its North American base into the Far East to become a global competitor in the luxury segment.
The 1992 acquisition of Regent International, Hong Kong, by Four Seasons of Canada represents a merger of two regional competitors that results in a single competitor with a global presence. In this article, we use portions of the globalization framework of Johansson and Yip to assess Four Seasons's acquisition of Regent International.1 We chronicle the evolution of Four Seasons from a domestic hotel company to a global hotel operation and assess its management strategy.
The collapse of Harunori Takahashi's US$5 billion E.I.E. International Corporation late in 1991 provided the opening Four Seasons needed for global expansion.When bankers foreclosed on E.I.E. International, which owned Regent International, Four Seasons was the only prospective purchaser with the resources and reputation to satisfy the sellers. Moreover, an acquisition of Regent fit Four Seasons's strategy. To quote founder Isadore Sharp, Four Seasons had "three of the four requirements for global success: a strong capital base, a top operational capability, and rising public awareness of its brand name." What it lacked was a presence in all three major world markets (North America, Europe, and Asia).2
On March 31,1992, Four Seasons signed a letter of intent with E.I.E. International to acquire 100-percent ownership of Regent, including its management contracts, trade names, and trademarks, plus 25-percent ownership of the Regent Hotel in Hong Kong. In a complex aspect of the deal, Four Seasons and E.I.E's bank syndicate would form a partnership to hold several hotel properties. In the acquisition Four Seasons acquired all outstanding shares of Regent from Hotel Investment Corporation (HIC), a Japanese corporation that continued to hold ownership interest in Regent hotels. As part of the acquisition, Four Seasons established with HIC a group of partnerships, known as FRA Properties, that would own selected hotels. The two partners contributed ownership interest of certain hotels to FRA Properties to provide a revenue base for the arrangement.
The addition of the Asian operations gave Four Seasons a timely profit boost. At the time of the purchase the Four Seasons North American operation was losing money, while the company was gaining considerable profit from...