Marriott Vacations Worldwide to acquire ILG

Marriott Vacations Worldwide Corporation and ILG announced that they have entered into a definitive agreement under which MVW will acquire all of the outstanding shares of ILG in a cash and stock transaction with an implied equity value of approximately $4.7 billion on April 30. Under the terms of the agreement, ILG shareholders will receive $14.75 in cash and 0.165 shares of MVW common stock for each ILG share.

ILG is a leading provider of premier vacation experiences with over 40 properties and over 250,000 owners in its Vistana Signature Experiences and Hyatt Vacation Ownership portfolios, as well as exchange networks that comprise nearly two million members and over 3,200 resorts worldwide.

As a combined entity, MVW and ILG will be a leader in the vacation experiences industry with significant scale, an expanded presence in key leisure destinations, the largest portfolio of upper-upscale and luxury brands in the industry and world-class exchange networks. The combined company will be the global licensee of seven upper-upscale and luxury vacation brands, including Marriott Vacation Club, Grand Residences by Marriott, Ritz-Carlton Destination Club, Sheraton Vacation Club, Westin Vacation Club, St. Regis Residence Club, and Hyatt Residence Club. It will also have exclusive access for vacation ownership to the Marriott Rewards, Starwood Preferred Guest and Ritz-Carlton Rewards loyalty programs for its six Marriott vacation ownership brands. With respect to its Hyatt business, the combined company will have rights to develop, market and sell under the Hyatt Vacation Ownership programs, including access to the almost 10 million members of the World of Hyatt loyalty platform. Finally, strengthening MVW’s vacation properties’ affiliation with ILG’s exchange networks will reinforce Interval International’s industry leading position and advance our objective of creating shareholder value.

“This transaction will combine two of the premier global vacation ownership companies to create a more diversified company with significantly enhanced marketing potential and scale to drive sales growth and value for both MVW and ILG shareholders,” said Stephen P. Weisz, President and CEO of Marriott Vacations Worldwide. “With ILG, we will bring together six world-class vacation ownership brands under one licensing relationship with Marriott International, which will enable us to leverage high-value marketing and sales channels, including those provided by Marriott International’s platforms, and enhance the benefits of our access to Marriott International’s loyalty programs, call transfer and hotel linkage programs. We will also diversify our vacation ownership business with the addition of the Hyatt Vacation Ownership platform, providing exciting growth opportunities outside of the Marriott and Vistana platforms. Additionally, with ILG’s leading exchange networks, we will gain recurring, high-margin revenue streams.”

Craig M. Nash, Chairman, President and CEO of ILG said, “The strategic rationale for this transaction is clear. Combining these two highly complementary businesses will create an industry leader with enhanced scale and a broader product portfolio that will have great benefits for our members, owners and guests. Thanks to the dedication and hard work of our more than 10,000 talented associates around the world, we have been able to successfully adapt to changing industry dynamics throughout our history, and this transaction is another step in that evolution. MVW associates share the same values and goals that we have championed for so long, and we are confident that MVW and ILG are as strong a cultural fit as they are strategic.”

Compelling strategic and financial benefits
  • Creates a leading global luxury and upper-upscale vacation ownership operator with access to world-class loyalty programs and an expanded portfolio of highly demanded vacation destinations.
  • Creates a platform to accelerate sales growth.
  • Diversifies revenues and expands margins with significant contribution from recurring and fee-based revenue streams.
  • ILG’s exchange networks and resort management business represent profitable revenue streams that will further diversify the company’s revenue profile and expand its margins.
  • Interval International, ILG’s leading exchange business, will maintain its headquarters in Miami, Florida, where it has been based since its founding in 1976.
  • Transaction structure will result in a strong and flexible balance sheet to support future growth and shareholder returns.
  • Immediately accretive to MVW’s earnings and free cash flow profile and generates significant near-term cost saving.
Integration planning and leadership

The Marriott Vacations Worldwide Board of Directors will be expanded from eight to 10 members to include two current members of the ILG Board. MVW’s headquarters will remain in Orlando, and the combined company will maintain a significant operating presence in Miami.

Following the close of the transaction, the combined company will trade on the NYSE under ticker symbol VAC.

Transaction details

Under the terms of the merger agreement, which has been unanimously approved by the Boards of both companies, ILG shareholders will receive $14.75 in cash and 0.165 shares of MVW common stock for each ILG share. Following the close of the transaction, ILG shareholders will own approximately 43% of MVW’s common shares on a fully-diluted basis, based on the number of MVW common shares outstanding today. Qurate Retail, Inc. has entered into a voting agreement with ILG in support of the transaction.

MVW has received financing commitments from J.P. Morgan and BofA Merrill Lynch. The completion of the transaction is not subject to a financing contingency.

Approvals

The transaction, which is expected to close in the second half of 2018, is subject to the satisfaction of customary closing conditions, including regulatory approvals and approval by shareholders of both companies.

Advisors

J.P. Morgan is acting as exclusive financial advisor to MVW and Kirkland & Ellis LLP is serving as legal advisor. Goldman Sachs & Co. LLC and Moelis & Company LLC are serving as financial advisors to ILG and Paul Weiss, Rifkind, Wharton & Garrison LLP is serving as legal advisor.

Additional information with respect to the transaction will be posted in the investor relations sections of both companies’ websites.

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SOURCE: Marriott Vacations Worldwide Corporation