Nov. 6 (Bloomberg) -- Four Seasons Hotels Inc., the manager of 74 luxury properties, received a $3.7 billion bid to be taken private by its chief executive officer, Microsoft Corp. Chairman Bill Gates and Saudi Prince Alwaleed Bin Talal.

Gates' Cascade Investments LLC and Alwaleed offered $82 a share in cash, Four Seasons said today in a statement. Isadore Sharp, who would remain chairman and CEO of the Toronto-based company, would receive $288 million from the deal.

The transaction ``is the only one I am prepared to pursue,'' said Sharp, who opened the first Four Seasons hotel in 1961 in Toronto. The company's shares rose more than the offer price on speculation Four Seasons will get a higher bid.

Hotel companies have become takeover targets as real estate prices in the world's largest cities rise and the cost of new construction soars. An investment group owned by the government of Dubai is purchasing Travelodge Hotels Ltd. for $1.3 billion, while Blackstone Group LP has raised $5.25 billion to buy hotels and other properties.

The offer came after Four Seasons' shares rose 18 percent in the 12 months through last week. That trails InterContinental Hotels Group Plc's 22 percent increase and a 35 percent gain at Marriott International Inc., owner of the Ritz-Carlton brand.

``This is a great business,'' said Jim Hall, who holds 160,000 Four Seasons shares among about $665 million he helps manage at Mawer Investment Management in Calgary. ``I can understand why they would take it private if the market isn't giving them full value for it.''

Higher Bid Possible

The bid is 28 percent higher than the company's closing price of $63.87 on Nov. 3.

Four Seasons' shares jumped $18.63, or 29 percent, to $82.50 at 4:01 p.m. in New York Stock Exchange composite trading.

``The market is anticipating Sharp coming back and raising it a bit,'' said Amit Kapoor, a hotel analyst at Rye, New York-based Gabelli & Co., which doesn't own the stock.

Alwaleed is Four Seasons' biggest holder, with 7.39 million shares, or 22 percent of the company, as of April 2005, according to data compiled by Bloomberg. The Gates Foundation held 1.98 million shares, or 6 percent, as of June 2006.

Gates and Alwaleed have collaborated for at least two years. After attending a dinner at Gates' Bellevue, Washington, home in early 2004, Alwaleed agreed to explore ways to assist Microsoft's expansion in Saudi Arabia, according to a report from the Saudi state SPA news agency archived on Saudinf.com.

Other Targets

Shares of other companies that analysts expect may be acquisition targets rose as well. Bermuda-based Orient-Express Hotels Ltd. gained $3.26, or 8.7 percent, to $40.65, while White Plains, New York-based Starwood Hotels & Resorts Worldwide Inc. increased $2.06, or 3.5 percent, to $60.36. London-based InterContinental Hotels Group Plc climbed 22.5 pence, or 2.2 percent, to 1,038.5 pence in London.

``The price offered for Four Seasons will represent the highest takeover multiple that we have seen in the lodging space,'' wrote Stephen Kent, an analyst at Goldman, Sachs & Co. ``There is no shortage of private-equity money chasing lodging deals currently.''

The price is 40 times estimated 2007 earnings before interest, taxes, depreciation and amortization, Kapoor said.

Moody's Investors Service and Standard & Poor's both placed Four Seasons on review for a possible downgrade to a non-investment-grade rating.

10 Percent

Sharp's family will keep a 10 percent stake in the company through special voting shares, while Gates and Alwaleed will split the remainder, Four Seasons said.

Sharp's private holding company owns all of Four Seasons' multiple-voting shares, giving him 65 percent of the votes as of April 4, according to a management circular.

``The transaction we have proposed offers the company long-term stability to pursue strategic goals,'' Sharp said on a conference call with investors. ``This proposal does not change the strategy, direction, management or leadership of the company.''

Four Seasons' second-quarter profit fell 42 percent to $9.1 million as the Canadian dollar strengthened against the U.S. currency. Revenue declined 9 percent to $67.8 million after it sold its interest in New York's Pierre hotel. The company posted a loss last year, and net income fell during three of the previous four years.

Gates's Cascade Investment has made energy investments including a joint venture this month with PNM Resources Inc., a New Mexico utility owner. It is also the biggest shareholder in Canadian National Railway Co., the country's largest railway.

Alwaleed's Interest

The Four Seasons deal conforms to Alwaleed's interest in recognizable hotel brands, said Kapoor. Alwaleed already owns the Four Seasons' George V in Paris among other properties.

Alwaleed is bidding through Kingdom Hotels International.

In April, Kingdom and Colony Capital LLC acquired Fairmont Hotels & Resorts Inc., the Toronto-based hotel chain that manages the Savoy of London and Chateau Frontenac in Quebec City, for $3.24 billion.

Alwaleed's spokeswoman at his Riyadh, Saudi Arabia-based Kingdom Holding Co. wouldn't comment. She declined to be identified.

To contact the reporter on this story: Kevin Bell in Toronto at kbell2@bloomberg.net; Oliver Staley in New York at ostaley@bloomberg.net.

Last Updated: November 6, 2006 17:04 EST