Marriott Vacations Worldwide has reached an agreement to acquire ILG at a price of around $4.7 billion. The deal will involve both cash and stock and will result in the biggest luxury brand with regards to timeshare vacation resorts. Investors of ILG will get approximately $14.75 in cash as well as 0.165 of the common stock of Marriott Vacations for every share that they hold.
The deal will see ILG investors getting a premium of around 13% based on last week’s closing prices of the shares of the two companies. The acquisition will generate annual savings of approximately $75 million with a period of 24 months.
Since 2017 ILG has been under pressure from activist investors who have been calling for the firm to merge. In May last year FrontFour Capital revealed that it had taken a 2% position in ILG before it started urging the firm to merger with Marriott Vacations. Earlier in the year FrontFour Capital nominated four directors to the board of ILG ahead of the annual meeting which will be held this month.
In February this year FrontFour Capital called for the board of ILG to conduct good faith talks with Marriott Vacations. According to FrontFour a refusal by the board to entertain a compelling transaction would result in questions being asked over the ability of the board to satisfy the fiduciary duties.
Revenues of the combined entity will amount to $2.9 billion. The combined business will also boast of over 100 vacation properties located around the globe. Additionally the combined business will enjoy exclusive access to the vacation ownership loyalty programs of Hyatt Hotels Corp and Marriott International.
According to Craig Nash, the chief executive officer of ILG, shareholders will get compelling and immediate cash value from the deal. They will also have an opportunity for participating in the combined company’s long-term growth potential.
“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,” said Nash in a statement.
After the close of the transaction earnings per share will be added in the course of the first full year and this will come in this year’s second half. Shareholders of Marriott Vacations and ILG must approve the transaction. ILG is advised by Moelis & Co and Goldman Sachs while the financial adviser of Marriott Vacations is JPMorgan Chase.