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. Portal/Andrew Kelly/File Photo ACKNOWLEDGE RIGHTS
Nov 6 (Portal) – Vacation property operator Hilton Grand Vacations (HGV.N) said on Monday it would buy rival Bluegreen Vacations (BVH.N) in a $1.5 billion deal including debt, to attract younger customers to its timeshare properties and expand the offering.
Under the terms of the deal, Bluegreen Vacations shareholders 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 after demand surged following the lifting of COVID-related lockdowns.
“Our board voted unanimously to approve this deal,” Hilton Grand Vacations CEO Mark Wang said in an interview with Portal. “Bluegreen is really the last thing we would call a high-value strategic opportunity in our space.”
Both Hilton Grand and Bluegreen Vacations market and sell timeshares, or vacation ownership interests – a model in which multiple owners have exclusive use of a property for a specific period of time.
Bluegreen Vacations shares rose 110% on Monday to close at $73.45, while Hilton Grand shares closed 8% lower at $34.25.
Hilton Grand Vacations said the deal is expected to close in the first half of 2024 and will increase Hilton Grand’s membership base from over 525,000 to over 740,000 and its resort portfolio from 150 to nearly 200.
About 75% of Bluegreen Vacations’ customers and owners are Generation X, many of whom are in their 40s and 50s or younger, Wang said.
“We are pleased to be able to support a solid client at an earlier stage in their life,” he said.
In addition, Hilton will expand its presence on the US East Coast and add a number of outdoor and ski resort destinations.
Hilton Grand, which spun off into a publicly traded company in 2017, also said it signed an exclusive 10-year marketing deal with outdoor retailer Bass Pro Shops.
“One of the biggest challenges with an independent vacation property company like BVH is that it does not have as well-known a brand as HGV (Hilton), and therefore customer acquisition costs are significantly higher,” analysts at Truist Securities said in a note.
Separately, the company cut its 2023 adjusted core profit forecast to $1 billion to $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 advisors to Bluegreen Vacations, and BofA Securities is acting as exclusive financial advisor to Hilton Grand Vacations.
Reporting by Aatreyee Dasgupta and Kannaki Deka in Bengaluru and Doyinsola Oladipo in New York. Additional reporting by Abhinav Parmar in Bengaluru. Editing by Shailesh Kuber, Devika Syamnath and Matthew Lewis
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