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Hilton Grand Vacations Acquires Diamond Resorts for $1.4 Billion

Hilton Grand Vacations at MarBrisa

Hilton Grand Vacations;

Hilton Grand Vacations Inc. (NYSE:HGV) these days introduced that it has entered into a definitive agreement to acquire Diamond Resorts Global, Inc. from money managed by affiliates of Apollo World-wide Management, Inc. (NYSE:APO), cash managed by affiliates of Reverence Capital Companions, and other Diamond stockholders, in a inventory-based mostly transaction with an fairness value of close to $1.4 billion1. Less than the phrases of the settlement, the Apollo Money and other Diamond stockholders will receive 34.5 million shares of HGV widespread stock, subject matter to customary changes.

The acquisition will mix the energy of HGV’s model and tradition with Diamond, the premier unbiased timeshare operator. Diamond’s 92 leisure resorts and practically 400,000 entrepreneurs uniquely enhance HGV’s 62 upscale and luxury qualities and around 325,000 house owners, and the mix will generate the premier trip possession organization with the broadest giving in the field.

“I’m enthusiastic to announce our transformational agreement to include Diamond Resorts to the Hilton Grand Holidays loved ones, accelerating our upcoming section of growth,” claimed Mark Wang, president and CEO of Hilton Grand Vacations. “This strategic combination will leverage the strengths of each corporation, positioning us to drive important Internet Operator Advancement though improving efficiencies of scale and building significant shareholder worth. Diamond’s considerable regional, travel-to community of resorts and expanded demographics uniquely complement HGV’s ideal-in-class lead technology, planet-class hospitality, and premier destinations backed by the toughness of the Hilton brand name. For our valued crew users, homeowners and attendees, this blend results in new chances to give thrilling destinations and memorable family vacation experiences whilst continuing to offer remarkable levels of support.”

“Through this settlement, HGV and Diamond will generate a new international standard of getaway ownership hospitality,” claimed Mike Flaskey, CEO of Diamond Resorts. “Together, we will expand Diamond’s special gatherings and live performance platform and produce the broadest range of globe-class ordeals readily available in the market, delivering our customers and house owners with additional flexibility, unforgettable holidays and encounters of a life time. We are thrilled to sign up for the HGV family members and seem ahead to acquiring new heights of excellence.”

Transaction Highlights

  • Enables significant price creation from scale: brings together the major independent timeshare organization with Hilton Grand Vacations’ solid brand name and society
    • Expands and diversifies HGV’s vacation resort portfolio into about 20 new marketplaces.
    • The put together company will have 720,000 homeowners, 154 resorts and 48 product sales centers.
  • Diversifies HGV’s portfolio: provides added drive-to destinations and permits HGV to leverage the Hilton network to widen shopper access
    • Doubles the variety of getaway solutions for the mixed owner foundation.
    • Diamond’s complementary footprint will bolster HGV’s solid community of beach, attraction-based, and city marketplaces, when adding new regional push-to places in out of doors, desert and ski spots.
    • Broader selection of pricing and product selections will widen shopper get to, improving alignment with the 112 million Hilton Honors customers?.
  • Accelerates start of HGV-branded trust merchandise giving: rebrand Diamond’s attributes in excess of time to travel profits advancement in a new client phase
    • Combining HGV’s details-dependent deeded solution with Diamond’s factors-dependent have confidence in structure will allow for the Organization to cater to a wider audience, bring in far more new consumers and generate incremental progress in a capital-economical method.
    • HGV’s deeded item supplies high quality pricing, inventory sourcing adaptability, and the means to pre-market tasks to help strong project-stage money movement, while offering consumers and owners the value of certain availability.
    • The introduction of a trust products lets for lessen barriers to ownership, diminished stock delivery volatility and inventory recycling, enabling smoother gross sales and upgrades whilst giving prospective buyers and house owners community and pricing overall flexibility.
    • Integrates Diamond’s innovative Events of a Lifetime® experiential gross sales and advertising platform that drives solid engagement and Volume For each Guest (VPG) rates with HGV’s owner base.
  • Generates above $125 million in run-level price synergies, predicted to be achieved in the initial 24 months adhering to near
    • Sizeable long run income synergy alternatives.
  • Raises recurring EBITDA streams and drives overall funds move, with altered no cost hard cash move per share accretion in calendar year a person2
    • The combined corporation is anticipated to crank out regular-point out adjusted free of charge hard cash move conversion of 50-60%, pushed by its realization of expense synergies, substantial stock pipeline, obtained inventory and reduced extended-phrase stock paying out.
    • Incorporating new proprietors embeds additional value for the corporation in excess of the lifetime of their possession.
    • The put together corporation is predicted to crank out roughly 50% of Section Adjusted EBITDA from recurring sources, together with club membership costs, home management charges and financing service fees.
  • Persuasive valuation and deal structure facilitate monetary adaptability and deleveraging
    • Important funds flow technology is anticipated to enable for immediate deleverage, returning to below 3.0x within just 24 months.
    • Professional-forma liquidity of $1. billion at year-conclude 2020.

Transaction Particulars

Less than the phrases of the arrangement, the Apollo Resources and the other Diamond stockholders, including the Reverence Funds, are predicted to get 34.5 million shares of HGV widespread inventory, valued at about $1.4 billion, subject matter to customary changes. Upon transaction shut, existing HGV shareholders will have around 72% of the mixed enterprise and the Apollo Resources will have approximately 28% of the put together corporation.

The transaction, which was unanimously permitted by the Board of Directors for both firms, is expected to near in the summer months of 2021, topic to customary closing circumstances and regulatory approvals. The issuance of HGV widespread stock in the transaction is matter to shareholder acceptance.

HGV’s administration crew, which include President & Main Government Officer Mark Wang, Chief Economical Officer Dan Mathewes, and Main Working Officer Gordon Gurnik, will continue on to serve in their present roles on transaction near. HGV’s Board of Administrators will be expanded from 7 to 9 associates, and the Apollo Cash will have the appropriate to appoint two directors as long as their fairness ownership stays at or earlier mentioned 15% of the exceptional inventory at closing and one particular director as extensive as their equity possession remains at or earlier mentioned 10% of the superb inventory at closing.

BofA Securities is performing as exceptional money advisor for HGV, and Alston & Chook LLP, Simpson Thacher & Bartlett LLP, and Foley & Lardner LLP are acting as lawful counsel. Credit score Suisse is performing as direct economic advisor and Goldman Sachs is also acting as economic advisor for Diamond, with Paul, Weiss, Rifkind, Wharton & Garrison LLP performing as authorized counsel.

HGV has obtained financing commitments from BofA Securities, Deutsche Lender and Barclays with PJT Associates acting as funds markets advisor to HGV.

1 Assumes issuance of 34.5 M shares of stock at $40.32 per share

2 Excluding one-time transaction connected bills

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