In a further sign of consolidation in the timeshare industry, Orlando-based Marriott Vacations Worldwide (NYSE:VAC) said Monday it will buy Miami-based ILG for $4.7 billion in stock and cash.
ILG's stock rose about 5 percent on the news of the deal, while Marriott Vacations - paying $14.75 in cash and 0.165 of its own shares for each ILG share - slid 10 percent.
The merger is expected to add to Marriott's earnings and save at least $75 million in costs.
The combined company will have 650,000 timeshare owners and more than 100 vacation properties. The firm in January nominated four directors to ILG's board ahead of its annual meeting in May. FrontFour said that refusal to "entertain such a compelling transaction" would "call into question the existing board's ability to satisfy its fiduciary duties".
ILG has more than 250,000 owners in its Vistana Signature Experiences and Hyatt Vacation Ownership portfolios. 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.
For shareholders, the deal "provides them with immediate and compelling cash value and the opportunity to meaningfully participate in the long-term growth potential of a powerful combined company", ILG Chief Executive Officer Craig Nash said in the statement.
Hotel chain Marriott International Inc (MAR.O) bought Starwood Hotels & Resorts Worldwide Inc about two years ago in a $12 billion deal, months after Starwood spun off its timeshare business and merged it with ILG. The transaction is expected to close in the second half of 2018, subject to regulatory approvals and approval by shareholders of both companies. 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.
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Yamamoto said: "We formally sat down for the first time, and started talking about specific requirements for the deal to move forward".