😎 Summer Sale Exclusive - Up to 50% off AI-powered stock picks by InvestingProCLAIM SALE

Hilton Grand to buy Bluegreen Vacations in $1.5 billion deal

Published 11/06/2023, 07:45 AM
Updated 11/06/2023, 05:56 PM
© Reuters.
HGV
-

By Aatreyee Dasgupta and Kannaki Deka

(Reuters) -Vacation property operator Hilton Grand Vacations (NYSE:HGV) said on Monday it would buy peer Bluegreen Vacations (NYSE:BXG) in a $1.5 billion deal including debt, to attract younger customers for its timeshare properties and expand offerings.

Under the deal terms, shareholders of Bluegreen Vacations will receive $75 in cash for each share held, more than double the stock's closing price on Friday, valuing the company at $1.28 billion.

High inflation has begun to weigh on domestic travel in the United States, following a surge in demand when COVID-related lockdowns were lifted.

"Our board voted unanimously for the approval of this deal," Mark Wang, chief executive of Hilton Grand Vacations, told Reuters in an interview. "Bluegreen really is the last what we would call quality strategic opportunity in our space."

Both Hilton Grand and Bluegreen Vacations market and sell timeshares, or vacation ownership interests - a model where multiple owners have exclusive use of a property for a period of time.

Shares of Bluegreen Vacations shot up 110% to close at $73.45 on Monday, while Hilton Grand stock closed 8% lower at $34.25.

The deal is expected to close during the first half of 2024 and will increase Hilton Grand's membership base to more than 740,000, from more than 525,000, and its resort portfolio from 150 to nearly 200 properties, Hilton Grand Vacations said.

Approximately 75% of Bluegreen Vacations' customer-owners are Generation X, many of which are in their 40s to 50s, or younger, said Wang.

"We're excited that we're going to be able to track a solid customer at an earlier stage in their life," he said.

It will also expand Hilton's presence along the U.S. East Coast while adding a number of outdoor and ski destinations.

Hilton Grand, which was spun off into a publicly traded company in 2017, also said it had signed an exclusive 10-year marketing agreement with outdoor retailer Bass Pro Shops.

"One of the major challenges with an independent Vacation Ownership company like BVH is that they do not have a well-recognized brand like HGV (Hilton) does and subsequently customer acquisition cost is significantly higher," said Truist Securities analysts in a note.

© Reuters. FILE PHOTO: Mark Wang, President and CEO of Hilton Grand Vacations, rings the opening bell at the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S., August 9, 2021. REUTERS/Andrew Kelly/File Photo

Separately, the company cut its 2023 adjusted core earnings forecast to between $1 billion and $1.02 billion, from a previous forecast of $1.09 billion to $1.12 billion.

Credit Suisse Securities and Wells Fargo are acting as financial advisers to Bluegreen Vacations, and BofA Securities is acting as the exclusive financial advisor for Hilton Grand Vacations.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.