Marriott puts down $4.7 billion to acquire ILG
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Marriott puts down $4.7 billion to acquire ILG

Marriott Vacations, the timeshare vacation segment of the world’s largest luxury hotelier, Marriott International, has agreed to buy ILG Inc. for “about” $4.7 billion. The resultant business will be the world’s biggest luxury brand for timeshare vacation resorts. Marriott says that the purchase should result in $75 million of annual savings within two years. This deal has been driven by activist investors at FrontFour Capital, which said in a public letter in February that refusal “to entertain such a compelling transaction” would “call into question the existing board’s ability to satisfy its fiduciary duties.”

Marriott’s share price has risen by 42% over the last 12 months

graph 0305 marriott

SOURCE: Yahoo Finance

ILG CEO Craig Nash released a statement over the deal, saying that it provided shareholders with “immediate and compelling cash value and the opportunity to meaningfully participate in the long-term growth potential of a powerful combined company. 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.”

Marriott Vacations CEO Steve Weisz added that the deal “really creates a portfolio of upper-upscale brands that’s surpassed in the industry.”

The new business will have revenue of $2.9 billion and own more than 100 vacation properties worldwide. It will also have “exclusive access” to Marriott’s industry-leading loyalty programs for vacation ownership. FrontFour portfolio manager Stephen Loukas released a statement saying he was “highly pleased” to see the deal go through, and expects the “total cost synergy and incremental top-line growth potential of the company” to “significantly exceed” $100 million a year. Marriott declined to comment how far beyond the $75 million minimum synergies target the business will go, long term.

Disclosure

Dominion holds Marriott international in its Global Trends Luxury Fund.


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