Marriott Vacations Worldwide has acquired all outstanding shares of Miami-based Interval Leisure Group (ILG) for approximately US$4.7 billion, creating a luxury brand giant for timeshare vacation resorts.
The deal was one predicted to happen. Both Marriott Vacations Worldwide and ILG have exclusive licenses to sell timeshare using Marriott International-licensed brands and customer lists, which created a complicated situation when Marriott International acquired Starwood (which had an exclusive license agreement with ILG) in 2016.
The cash and stock transaction (ILG shareholders will receive US$14.75 in cash and 0.165 shares of VAC common stock per share of ILG. ILG shareholders will own approximately 43% of the pro forma common shares on a fully-diluted basis) values ILG shares at US$36.93 (based on VAC’s last close), representing a 13% premium.
ILG already has 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.
The combined companies will have revenues of US$2.9 billion, according to Bloomberg, and would make up about 650,000 owners, over 100 vacation properties and more than 20,000 vacation ownership units around the world.
They would 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.
The merger will also allow for 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 new firm 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.
Founded in 1976, ILG took in US$1.36 billion in revenue in 2016, according to the South Florida Business Journal. The company will maintain its Miami headquarters with a “significant operating presence,” the publication reported, while Marriott Vacations Worldwide’s headquarters will stay in Orlando.
The deal is expected to close in the second half of 2018 if it receives regulatory approvals.