# DRI purchased by Apollo Global Management, LLC



## johnrsrq

http://quotes.wsj.com/DRII


lucky  lucky  lucky dogs


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## nightnurse613

*Diamond Resorts International purchased by Apollo Global Management, LLC*

From the DRI Website:
Dear Members and Owners,

Today we announced that we have entered into a merger agreement under which an affiliate of Apollo Global Management, LLC will acquire Diamond Resorts International, Inc. We wanted to reach out to you directly to assure you that this transaction will not impact your membership or ownership in any way and you may continue to look forward to a lifetime of vacation experiences with us. Our top priority remains providing our members and owners with the unparalleled vacation experiences they have come to expect, and we will continue to deliver exceptional hospitality.

We look forward to seeing you on your next vacation.

Stay happy, Stay healthy and Stay Vacationed.™

Sincerely,
Diamond Resorts International®





Diamond Resorts International®, 10600 West Charleston Boulevard, Las Vegas, NV 89135 USA


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## TheWizz

I received the same email.  I just recently started the process to deed-back my three weeks I own.  I sure hope this doesn't put the brakes on that...


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## RLS50

As a former Gold Key owner I must say I am cautiously optimistic on this announcement.   I know a number of former Gold Key owners like myself that have been shocked at how slowly and poorly the takeover by Diamond has progressed and at how inadequate and lacking the Diamond internal customer support processes appear to be compared to other major brands (i.e. Marriott).


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## eggmansr71

johnrsrq said:


> http://quotes.wsj.com/DRII
> 
> 
> lucky  lucky  lucky dogs



Why are they lucky with this?   I'm genuinely curious.


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## VegasBella

duplicate thread
http://tugbbs.com/forums/showthread.php?t=243618


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## tleonard

Hi, Do we know anything about this Apollo Global Management, LLC ?


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## RLS50

tleonard said:


> Hi, Do we know anything about this Apollo Global Management, LLC ?


http://www.forbes.com/sites/nathanv...es-and-outmaneuvering-creditors/#268f66c6356d

Hard to say what happens going forward.   Apollo is a private equity asset conglomerate, not a travel or timeshare management focused company.   Interesting enough it was discussed here in the DRI forum back in Jan / Feb that Diamond's major shareholders were putting pressure on DRI management to do something to unlock the PPS value because they felt the value of the individual parts of DRI was greater than the sum.

So is this a move to transfer to Apollo who may see a way to double their investment in the DRI "asset" by breaking it up and selling off pieces to other companies?

It will be interesting to see what happens going forward.


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## pedro47

Purchased price was 2.2 billion dollars.


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## pedro47

Press Release from Wall Street Journal @ 11:09 AM.. Rigrodsky & Long, P.A. Announces Investigation of Buyout.


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## clifffaith

TheWizz said:


> I received the same email.  I just recently started the process to deed-back my three weeks I own.  I sure hope this doesn't put the brakes on that...



We've been sitting on the deed-back paperwork since March, at DRI's suggestion that it didn't really need to be returned in 30 days, to safeguard a family get together in Santa Fe the third week of July.  One of our chores after the 4th of July holiday is to get over to our financial advisor's office to get the paperwork notarized so we can send it off immediately upon our return.  Of course we have concerns that the change will have a negative impact on us.  Think we'll go ahead and submit it next week, figuring if we have to buy hotel rooms for family members that would be a small price to pay for having the paperwork completed early, although I figure it will really take several months before our forms rise to the top of the pile.


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## bnoble

RLS50 said:


> So is this a move to transfer to Apollo who may see a way to double their investment in the DRI "asset" by breaking it up and selling off pieces to other companies?


That would be hard to do; what happens with The Club owners who currently have access to all of the individual pieces?


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## TUGBrian

this would explain all of the financial "scrutiny" we saw about DRI over the past 18 months or so....


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## RLS50

bnoble said:


> That would be hard to do; what happens with The Club owners who currently have access to all of the individual pieces?


It may be impossible to do, so you might be correct.  Maybe they just wanted to take the whole enterprise private?  I think Apollo has controlling interest in Norweigan and at one time Great Wolf Lodge (which they later flipped), so maybe they keep the entire thing under their umbrella or maybe they sell off when the right offer comes along?  Hard to say really.


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## Xolodno

RLS50 said:


> It may be impossible to do, so you might be correct.  Maybe they just wanted to take the whole enterprise private?  I think Apollo has controlling interest in Norweigan and at one time Great Wolf Lodge (which they later flipped), so maybe they keep the entire thing under their umbrella or maybe they sell off when the right offer comes along?  Hard to say really.



I suspect they have no intention of keeping any business they acquire long term.  Its first and foremost an investment company.  But like you inferred, breaking up Diamond would be a huge legal and costly nightmare.  Plus doesn't make any sense, company probably is more valuable on the whole.  Furthermore, any company buying one of the collections knows the TS owners will be pissed for losing access to the rest of the resorts and are more likely to walk away than pay those maintenance fees.

Do they still own a chunk of Caesars?  If its ready to emerge from Chap 11, I could easily see them folding that together and selling it as a package.  Maybe having Diamond in the portfolio will alleviate the loss they have on Caesars?


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## Bill4728

IMHO  If another TS company had bought DRI then that might be news  BUT if some investment company buys DRI, I'd guess that all that is going to happen is the owners will get paid and nothing else will change at DRI.


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## jeffrapp

*DRI was acquired*

I just received this email:


Dear Members and Owners, 

Today we announced that we have entered into a merger agreement under which an affiliate of Apollo Global Management, LLC will acquire Diamond Resorts International, Inc. We wanted to reach out to you directly to assure you that this transaction will not impact your membership or ownership in any way and you may continue to look forward to a lifetime of vacation experiences with us.

Does anyone know anything about this?
Is it likely their statement bout nothing changing is true?
Does anyone know if DRI is still accepting deed backs?
Thanks!


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## ronparise

Apollo Global Management, LLC and its subsidiaries ("Apollo") is a leading global alternative investment manager.  We are contrarian, value-oriented investors in private equity, credit and real estate, with significant distressed expertise.  We operate our businesses in an integrated manner which we believe distinguishes us from other alternative investment managers.  We have applied this investment philosophy over our 26-year history, deploying capital across the balance sheet of industry leading businesses, and *seeking to create value for our investors *throughout economic cycles.


so I would expect any changes to be changes that will benefit Apollo's investors


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## jeffrapp

ronparise said:


> Apollo Global Management, LLC and its subsidiaries ("Apollo") is a leading global alternative investment manager.  We are contrarian, value-oriented investors in private equity, credit and real estate, with significant distressed expertise.  We operate our businesses in an integrated manner which we believe distinguishes us from other alternative investment managers.  We have applied this investment philosophy over our 26-year history, deploying capital across the balance sheet of industry leading businesses, and *seeking to create value for our investors *throughout economic cycles.
> 
> 
> so I would expect any changes to be changes that will benefit Apollo's investors


Thanks for the reply.
I was concerned about any changes that may impact DRI members, not Apollo's investors.


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## ronparise

jeffrapp said:


> Thanks for the reply.
> I was concerned about any changes that may impact DRI members, not Apollo's investors.



I was thinking raising the management fee and cutting services, would impact the DRI owners and benefit the investors


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## bogey21

ronparise said:


> ........so I would expect any changes to be changes that will benefit Apollo's investors



Agree 100%.  Guys like this have a singular purpose;i.e. to maximize their own bottom lines.

George


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## RLS50

ronparise said:


> I was thinking raising the management fee and cutting services, would impact the DRI owners and benefit the investors


I am not sure how much more DRI can do that?  They already have entire owner support departments that are so understaffed that you can never reach them on the phone or by email, and not even get the promised callback in 24-48 hours...even trying for days or weeks at a time.

In my opinion DRI already provides the least value added owner services and communication while at being one of the most expensive in costs of any timeshare company we currently own with.  Could it get worse?


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## kathi

Do others have the sense that the DRI fees will increase?


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## johnrsrq

*rescue remedy*



eggmansr71 said:


> Why are they lucky with this?   I'm genuinely curious.




because their stock price bounced from a  downward spiral and exit plan revealed.

Now, those pesky filings and external pressures will be reduced.

I expect no change to fees or operations as a result of this. Good for those who held including the Chinese.


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## johnrsrq

*one last thought*

thinking out loud it (which can be dangerous).....

there's probably a due diligence period when Apollo looks at the books and all things financial. I wonder if there's any unreported significant material fact which would cause a rethink. I guess those private equity guys know what they getting... or do they.  The joys of being public.


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## ccwu

johnrsrq said:


> thinking out loud it (which can be dangerous).....
> 
> there's probably a due diligence period when Apollo looks at the books and all things financial. I wonder if there's any unreported significant material fact which would cause a rethink. I guess those private equity guys know what they getting... or do they.  The joys of being public.



Good luck. 

Is Apollo Returning to Its 'Junk' Roots With Its Acquisition of Diamond Resorts? 
https://www.thestreet.com/story/136...f-diamond-resorts.html?puc=yahoo&cm_ven=YAHOO


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## seascapemvy

Now I am not sure what this means or when we will know but give it time.  However I don't think this is the end deal.  I think its a start.  Look back at other business deals.  One of the most interesting was Sears and Kmart.  Sears bought some Kmart locations and that drove up Kmart stock and then shortly after Kmart used their increased stock price to buy Sears.  Another deal more resently was the new land Universal bought in Florida.  The land was first sold at bankruptcy to one company that already had a deal with Comcast for the land.  

I don't know if there is a deal yet for Diamond but there were rumors that other timeshare companies were interested but didn't bid.  But based on the price paid their values went up big and now they could make an offer and it would look like a reasonable price to pay up to 2.5 billion and not hurt their stock price. Consolidation is needed in the timeshare market and more companies implementing exist options for owners.  Unless a real resale market with benefits exists it is critical for developers to impletement a buy back exist plan.  Otherwise timeshare will continue to have no long term value.  Wyndhams ovation is a start but neee improvements like including properties purchased via resale and a higher price over time.  Now if we could get someone to buy Westgate ......


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## RLS50

Random thoughts...

- Apollo bought Diamond.  They can use the word merger in the announcement however they want.  Maybe it is works in the sense they may plan to leave things status quo (for now).  But it appears Apollo is now the boss going forward and can do whatever they want with DRI, including making changes at the top if they desire, or flipping DRI to another larger company.

- I wonder if DRI knew it was challenged for the kind of growth major shareholders demanded under their current model?   Especially now with recent consolidation in the industry making them even smaller?    DRI appears to have been pursuing a recent strategy of buying growth, and they appeared to be paying top dollar for that (i.e. Gold Key purchase).   As a relatively small player in the industry, how long could they keep buying growth if it required them to be the highest bidder in the room?  In that respect going private would make sense versus remaining public.

- I also question the strategy of  paying top dollar for growth via the acquisition of companies with a generally happy owner community.  It is one thing to buy distressed companies with properties in disarray and raise fees rapidly.  But it seems to be another thing to buy quality companies that are generally well run and maintained, and then do the same thing.   With the former group you will find some owners thankful for the improvements and more willing to buy into the DRI program.  By contrast with the latter group you may find a lot of resentment for dramatically increased fees without a corresponding tangible positive impact for owners.


Many questions without answers.


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## TJALB

*DRI acquired by Apollo Mgnt Group*

Yesterday, 6/29/16, I received an email from DRI informing me that Apollo Global Management ,LLC has acquired Diamond Resorts International.  Does anyone know of this group and have they taken others over?  Any advantages or dis-advantages?  What do others think we can expect in the future?


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## bogey21

TJALB said:


> Yesterday, 6/29/16, I received an email from DRI informing me that Apollo Global Management ,LLC has acquired Diamond Resorts International.  Does anyone know of this group and have they taken others over?  Any advantages or dis-advantages?  What do others think we can expect in the future?



Hope for the best and anticipate the worst.

George


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## Kozman

Deeded my two ownerships back and glad I divested myself of $3000.00 in yearly maintenance fees.


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## nuwermj

RLS50 said:


> - Apollo bought Diamond.  They can use the word merger in the announcement however they want.  Maybe it is works in the sense they may plan to leave things status quo (for now).  But it appears Apollo is now the boss going forward and can do whatever they want with DRI, including making changes at the top if they desire, or flipping DRI to another larger company.



DRI is merging with a subsidiary of Apollo, not with Apollo itself. The subsidiary is Dakota Merger Sub, Inc. The reason it's a merger is that this subsidiary will take on the 2.2 billion debt for the purchase of DRI shares. Then DRI merges with Dakota Merger Sub, Inc. and it thereby becomes saddled with all that debt. There seems to be no limit to the schemes Wall Street types can think up.



RLS50 said:


> - I wonder if DRI knew it was challenged for the kind of growth major shareholders demanded under their current model?   Especially now with recent consolidation in the industry making them even smaller?    DRI appears to have been pursuing a recent strategy of buying growth, and they appeared to be paying top dollar for that (i.e. Gold Key purchase).   As a relatively small player in the industry, how long could they keep buying growth if it required them to be the highest bidder in the room?  In that respect going private would make sense versus remaining public.



a) Yes, DRI knows what shareholders expected. In the summer of last year the expectation was $40-50 per share. In October, two of the hedge funds went so far as to publish an open letter challenging that "Diamond's shares are materially undervalued." 

b) I don't think DRI paid top dollar for Gold Key or Intrawest. It paid 4 times the cash value for Gold Key and 3.9 times the cash value for Intrawest. Although there are not many timeshare acquisitions to compare with, ILG paid 12 time cash value for Vistana Signature. 

Here's the link to the open letter:
 [FONT=&quot]http://www.prnewswire.com/news-releases/frontfour-capital-and-adw-capital-send-letter-to-diamond-resorts-international-300163626.html[/FONT]




RLS50 said:


> - I also question the strategy of  paying top dollar for growth via the acquisition of companies with a generally happy owner community.  It is one thing to buy distressed companies with properties in disarray and raise fees rapidly.  But it seems to be another thing to buy quality companies that are generally well run and maintained, and then do the same thing.   With the former group you will find some owners thankful for the improvements and more willing to buy into the DRI program.  By contrast with the latter group you may find a lot of resentment for dramatically increased fees without a corresponding tangible positive impact for owners.



DRI's primary strategy is to buy access to owners in networks with limited flexibility and up-sell them to points. "We see an above average propensity for this customer base to purchase additional points in order to migrate out of the legacy portfolio." David Palmer sang this song at vertically every investor presentation he made over the last few years. In Diamond's case, only 20% of their sales are made to new owners (that is, people who do not already own some timeshare interest.) For comparison, Bluegreen and Marriott report that their sales targets are 50% existing owners and 50% new owners. If the new owners of DRI retain the exiting management team, I wouldn't except this strategy to change.


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## TUGBrian

appears the buyout has been quite good for shareholders...

http://www.forbes.com/sites/jennife...g-winner-in-apollos-latest-deal/#1d2259f37c00


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## johndeb

*DRI - Apollo Deal*

For some insight on the DRI - Apollo deal, think Cerberus buying Silverleaf Resorts a few years ago.  Now part of Orange Lake and Holiday Inn Club Resorts.  

I'm confident Apollo already has an agreement(s) with another timeshare company (perhaps more than one), to execute their plan.  Most likely, the sum of the parts greater than the whole.  My guess, it will involve one (or perhaps more than one) of the other big timeshare players.  Apollo makes money buying, selling, restructuring and financial engineering of the assets they acquire. I'm also confident there is a continuation of management agreement in place with DRI, so not much will change until the next announcement from Apollo.  We'll see.....


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## skimeup

*Buy back*

I am another owner who qualified for a buyback but it has been several months and I haven't received the paperwork.  They want $250 for the buy back but maybe they'll just forget about me and I won't even have to pay that?  I am too old to worry about my credit rating, so if they renege I won't worry!


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## TSPam

Hi,
Diamond bought Club Intrawest (now called Embarc--silly name I think) and now Diamond has been bought. Yikes. No Idea what this will mean for us.

Pam


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## BobSc

tleonard said:


> Hi, Do we know anything about this Apollo Global Management, LLC ?



Well, Apollo is no stranger to at least one of Diamond's Resorts - Mystic Palms. Apollo was the financier of that resort when Westgate execs broke away in 1997 to start Tempus Resorts. Apollo put up $40 million for the purchase of the then existing 72 condos and 600 acres off US 192, a few miles west of Disney's main gate. Tempus went bankrupt in 2010 or 2011 at which point it was acquired by Diamond.


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## buckor

johndeb said:


> For some insight on the DRI - Apollo deal, think Cerberus buying Silverleaf Resorts a few years ago.  Now part of Orange Lake and Holiday Inn Club Resorts.
> 
> I'm confident Apollo already has an agreement(s) with another timeshare company (perhaps more than one), to execute their plan.  Most likely, the sum of the parts greater than the whole.  My guess, it will involve one (or perhaps more than one) of the other big timeshare players.  Apollo makes money buying, selling, restructuring and financial engineering of the assets they acquire. I'm also confident there is a continuation of management agreement in place with DRI, so not much will change until the next announcement from Apollo.  We'll see.....


I think this is the key with Apollo...companies like Apollo buy companies like DRI that have a significant asset base...Apollo then will get its money back, and more, by refinancing the assets if DRI. Then, Apollo sells DRI to another company (or "parts" it out) making even more in the resale. For Apollo this is all about unlocking the cash held as hard assets by DRI.

For DRI TS owners, you probably won't see much change, especially in the near term. Apollo isn't interested in maximizing value based off of changing operations ( though they will if something just makes sense).

This will be fun to watch!


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## vacationtime1

buckor said:


> I think this is the key with Apollo...companies like Apollo buy companies like DRI that have a significant asset base...Apollo then will get its money back, and more, by refinancing the assets if DRI. Then, Apollo sells DRI to another company (or "parts" it out) making even more in the resale. For Apollo this is all about unlocking the cash held as hard assets by DRI.
> 
> For DRI TS owners, you probably won't see much change, especially in the near term. Apollo isn't interested in maximizing value based off of changing operations ( though they will if something just makes sense).
> 
> *This will be fun to watch!*



A lot more fun if you don't own DRI currently.  Apollo didn't buy DRI to cut fees or to improve customer service or product flexibility.


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## clotheshorse

RLS50 said:


> http://www.forbes.com/sites/nathanv...es-and-outmaneuvering-creditors/#268f66c6356d
> 
> Hard to say what happens going forward.   Apollo is a private equity asset conglomerate, not a travel or timeshare management focused company.   Interesting enough it was discussed here in the DRI forum back in Jan / Feb that Diamond's major shareholders were putting pressure on DRI management to do something to unlock the PPS value because they felt the value of the individual parts of DRI was greater than the sum.
> 
> So is this a move to transfer to Apollo who may see a way to double their investment in the DRI "asset" by breaking it up and selling off pieces to other companies?
> 
> It will be interesting to see what happens going forward.




Given Hilton is spinning off its timeshare business, maybe they will pickup some of the Club Intrawest properties if Apollo starts selling off pieces.   One can only hope.  Current state of timeshare mergers, acquisitions and spinoffs - stranger than fiction.


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## Xan

TheWizz said:


> I received the same email.  I just recently started the process to deed-back my three weeks I own.  I sure hope this doesn't put the brakes on that...





If you are lucky enough to finalize your deed-back, it may take up to a year, and then they sell your phone number to all sorts of vacation companies, most  affiliated with DRI.


Sent from my iPhone using Tapatalk


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## WBP

*The Saga/Drama Continues........*

http://www.businesswire.com/news/ho...-INTERNATIONAL-SHAREHOLDER-ALERT-SEC-Attorney


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## nuwermj

The list of law firms questioning this merger is getting longer. My guess is that DRI insiders will retain an ownership stake and are looking to make additional profit when Apollo sells DRI in a few year. $30 is too low, but the insiders are looking to get the higher price in the future transaction. 

Press Releases: 

SHAREHOLDER ALERT: Brodsky & Smith, LLC Announces an Investigation of The Board of Directors of Diamond Resorts International, Inc.- DRII

DIAMOND RESORTS INTERNATIONAL, INC. SHAREHOLDER ALERT: Former SEC Attorney Willie Briscoe and Powers Taylor LLP Investigate Sale to Apollo Global Management, LLC

Diamond Resorts International, Inc. Acquisition May Not Be in the Best Interests of DRII Shareholders (WeissLaw LLP is investigating possible breaches of fiduciary duty)

Wolf Popper LLP Investigates Buyout of Diamond Resorts International, Inc. by Apollo Global Management, LLC

SHAREHOLDER ALERT: Brower Piven Commences An Investigation Into The Proposed Sale Of Diamond Resorts International, Inc. And Encourages Investors To Contact The Firm For Additional Information

DIAMOND RESORTS INTERNATIONAL, INC. SHAREHOLDER ALERT: Rigrodsky & Long, P.A. Announces Investigation Of Buyout

SHAREHOLDER ALERT: Levi & Korsinsky, LLP Announces Investigation Concerning Whether the Sale of Diamond Resorts International, Inc. to Apollo Group Management, LLC for $30.25 Per Share is Fair to Shareholders - DRII

DIAMOND RESORTS (DRII) ALERT: Johnson & Weaver, LLP Launches an Investigation into the Fairness of Price and Process in Proposed Sale of Diamond Resorts International, Inc. Is $30.25 a Fair Price?

DIAMOND RESORTS (DRII) SHAREHOLDER ALERT – Andrews & Springer LLC Is Investigating Diamond Resorts International, Inc. For Potential Breaches of Fiduciary Duty


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## tomt73

*I've Been In This Business*

I spent much of my career as an investment analyst and mergers/acquisition facilitator. Private equity firms are buyers for one reason only: They see an opportunity to manage the asset for maximum cash flow. In "distressed" situations, they see a chance to fix the problems and flip the asset to a strategic buyer. Looking at the DRI financial data on the WSJ link, I see a ho-hum performer with a recent downtrend despite sales gains over the past five years. You can bet that Apollo will make strategic moves to improve cash flow. I would say that DRI's deed-back program will be in danger, and some MF "creep" can be expected as well. I also expect them to put pressure on the sales front.


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## Kozman

tomt73 said:


> I spent much of my career as an investment analyst and mergers/acquisition facilitator. Private equity firms are buyers for one reason only: They see an opportunity to manage the asset for maximum cash flow. In "distressed" situations, they see a chance to fix the problems and flip the asset to a strategic buyer. Looking at the DRI financial data on the WSJ link, I see a ho-hum performer with a recent downtrend despite sales gains over the past five years. You can bet that Apollo will make strategic moves to improve cash flow. I would say that DRI's deed-back program will be in danger, and some MF "creep" can be expected as well. I also expect them to put pressure on the sales front.



News like this makes me even happier that I got rid of $3000 per year in maintenance fees via the deed back program with DRI last year! Maintenance fee creep was more like maintenance fee leap after DRI took over. It went up 23% in one of the earlier years. Plus, DRI absolutely would not process my banking request to anyone except RCI regardless of phone calls and multiple attempts. I'm glad to be out of their clutches.


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## dougp26364

tomt73 said:


> I spent much of my career as an investment analyst and mergers/acquisition facilitator. Private equity firms are buyers for one reason only: They see an opportunity to manage the asset for maximum cash flow. In "distressed" situations, they see a chance to fix the problems and flip the asset to a strategic buyer. Looking at the DRI financial data on the WSJ link, I see a ho-hum performer with a recent downtrend despite sales gains over the past five years. You can bet that Apollo will make strategic moves to improve cash flow. I would say that DRI's deed-back program will be in danger, and some MF "creep" can be expected as well. I also expect them to put pressure on the sales front.





Kozman said:


> News like this makes me even happier that I got rid of $3000 per year in maintenance fees via the deed back program with DRI last year! Maintenance fee creep was more like maintenance fee leap after DRI took over. It went up 23% in one of the earlier years. Plus, DRI absolutely would not process my banking request to anyone except RCI regardless of phone calls and multiple attempts. I'm glad to be out of their clutches.



Ditto! As soon as I read that a private equity firm had acquired DRI, I was past ecstatic that we had given up our deeds. I see either the desire to increase cash flow, which will come directly from owners pockets with no improvement of the product. I just don't see this in anyway being a good thing for the owners.


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## RLS50

nuwermj said:


> DRI is merging with a subsidiary of Apollo, not with Apollo itself. The subsidiary is Dakota Merger Sub, Inc. The reason it's a merger is that this subsidiary will take on the 2.2 billion debt for the purchase of DRI shares. Then DRI merges with Dakota Merger Sub, Inc. and it thereby becomes saddled with all that debt. There seems to be no limit to the schemes Wall Street types can think up.


I had a long response typed and when I hit reply I got a server not available message and lost it all.  Very frustrating.

So short version.   First off, thanks for your reply and those details, some of which I knew, some I didn't.

As it relates to the merger, thanks for highlighting the subsidiary detail.  I had missed that originally.   But outside of being technically correct to call it a merger, what are your thoughts on next steps?   This current structure, with all that debt now included as you pointed out, seems to be temporary?   I get the current structure...to keep things running status quo for now...but what's next?   This announcement seems like DRI got moved to a temporary parking lot under the Apollo umbrella until the next move is made.

And as to DRI's sales model, with hindsight being 20/20 I wonder if it worked in the short term, but was always going to eventually stall and stagnate longer term?  It just never felt sustainable long term to me.

As a relatively newer and smaller timeshare company, what are they really known for?  What corporate brand or identity have they created this past 7-8 years?   For example, when we hear people talk about great customer service or great properties in the timeshare world do we ever hear DRI mentioned?  Ever?  Are they even top 5?  So what brand have they built that has any staying power with regards to customer loyalty and goodwill?   I mean as a boutique company shouldn't they be known for something more than merely some of the highest fees in the industry?  At some point that would seem like it would catch up with them.

I could be wrong and just my opinion, but what limited time I have had to see and learn about the DRI model, it just never seemed viable or investable longer term to me.

Maybe I am missing something.


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## RLS50

dougp26364 said:


> I just don't see this in anyway being a good thing for the owners.


Very possible.

But to add to my response to Nuwermj, from what I have seen from DRI so far as a customer, this felt like a company that was taken public so it could be sold someday.  Was DRI really building any kind of customer brand?  Or did it seem focused almost entirely on growing sales, with far less focus on the actual customer vacation experience?

I don't know.  Maybe this turns out even worse for DRI owners.  But I think this day was probably always inevitable based on how the company was structured and run.  

Now the question might be who out there eventually buys DRI from Apollo and how much.


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## nuwermj

RLS50 said:


> ... But outside of being technically correct to call it a merger, what are your thoughts on next steps? This current structure, with all that debt now included as you pointed out, seems to be temporary? I get the current structure...to keep things running status quo for now...but what's next? This announcement seems like DRI got moved to a temporary parking lot under the Apollo umbrella until the next move is made.



I think "temporary parking lot" is a good metaphor. From what I've read about private equity, they are going to sell DRI in a few years in order to realize their profits. I don't expect that Diamond will be broken up and sold in pieces. First, because Diamond's cash flow is tied to its economies of scale. And second, other than Diamond itself, there do not appear to be many buyers out there in the market. Diamond's revenues come from management contracts (40%) and point sales (60%). But the point sales seem to need The Club and The Club needs all the managed resorts. So I don't see a break-up in the future.  

Apollo bought the Great Wolf Lodge in May 2012 for $876 million and sold it in May 2015 for $1.35 billion, realizing a $474 million in profit. Although Great Wolf is not a timeshare company, I'm expecting something similar for DRI. My understanding of Diamond is that they have created a successful growth company, but, for reasons I don't fully understand, major segments of the financial sector have reservations. I presume DRI management -- Cloobeck, Palmer, et al. -- and Apollo have a plan to correct this problem. Then, Diamond will be sold as a public company again. 



RLS50 said:


> And as to DRI's sales model, with hindsight being 20/20 I wonder if it worked in the short term, but was always going to eventually stall and stagnate longer term? It just never felt sustainable long term to me.



As best I can tell, this is the view of many Wall Street types. Diamond's sole reliance on inventory recovery and the fact that they do not build inventory has been questioned at many investor's presentations over the last year or two. On the other hand, Diamond's strategy of buying access to deeded owners and converting them to points seems to be favorable to Wall Street analysts. 



RLS50 said:


> As a relatively newer and smaller timeshare company, what are they really known for? What corporate brand or identity have they created this past 7-8 years? For example, when we hear people talk about great customer service or great properties in the timeshare world do we ever hear DRI mentioned? Ever? Are they even top 5? So what brand have they built that has any staying power with regards to customer loyalty and goodwill? I mean as a boutique company shouldn't they be known for something more than merely some of the highest fees in the industry? At some point that would seem like it would catch up with them.



It might be that the lack of a brand name is hurting Diamond. But from what I've seen in the financial reports, Diamond's sales are doing as well as Marriott or Wyndham. Moreover, companies like The Berkley Group, Westgate, Welk and Bluegreen also don't have a popular brand name. Bluegreen, I think, is struggling, but the other three are still building in new locations. Clearly I don't have a good answer as to whether DRI's current growth model is sustainable, nor what changes they could make so that it becomes sustainable.


RLS50 said:


> I could be wrong and just my opinion, but what limited time I have had to see and learn about the DRI model, it just never seemed viable or investable longer term to me.



I think many on Wall Street agree with you. That is why the stock price has remained low despite strong growth.


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## TUGBrian

well, color me surprised!

http://www.gurufocus.com/news/42955...-ceo-david-f-palmer-sold-19-million-of-stocks


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## nuwermj

Gretchen Morgenson of the NY Times is asking the right questions.

Accounting Error May Not Derail Deal, but Ex-Director Bails Early Anyway

http://www.nytimes.com/2016/08/07/b...-deal-but-ex-director-bails-early-anyway.html


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## Quimby4

*Diamond Resorts sold to Apollo ??*

Just got this email this morning.
Not sure how this will effect Diamond.

A Message from Stephen J. Cloobeck

Dear Members and Owners,  

I am thrilled with the completion of the acquisition of Diamond Resorts by an affiliate of funds managed by affiliates of Apollo Global Management, LLC (“Apollo”), and am confident that this transaction will only enhance your vacation experience at Diamond resorts worldwide.  

Diamond Resorts was founded on the platform of The Meaning of Yes®, a customer-centric ideology that elevates the hospitality experience above all else. The company goes above and beyond to deliver exceptional vacations to its members, owners and guests so that you can enjoy a lifetime of memories and experiences that can be passed down from generation to generation. Over the years this platform has transformed into a core belief and our philosophy of We Love to Say Yes®.  

I am confident that the new owners will be excellent stewards of my legacy and continue to build this company upon its strong foundation and will remain focused on providing you with service excellence. You will continue to experience the highest level of hospitality while vacationing with your family at Diamond Resorts and there should be no changes in the day-to-day operations of the business.  

I am also pleased to announce that Apollo has offered me a special position to assist them as an advisor, leveraging my expertise in the hospitality sector. Although I will no longer have an ownership position in or direct relationship with Diamond Resorts, I will be available to consult with the Apollo team regarding current and future investments in this sector, including Diamond Resorts. I look forward to this next chapter and wish you many more unforgettable vacation memories to come with Diamond Resorts.  

Sincerely,  
Stephen J. Cloobeck  
Founder


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## Ty1on

http://tugbbs.com/forums/showthread.php?t=243618


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## nuwermj

Quimby4 said:


> Just got this email this morning.
> Not sure how this will effect Diamond.
> 
> A Message from Stephen J. Cloobeck



It is not clear to me that Cloobeck has had much involvement in the management of the company since 2013 when he stepped down as CEO. Most of the current senior managers were hired by Palmer. Palmer, Bentley, and Lanznar will continue as the company's officers and yesterday the latter two were appointed to the Board of Directors (Palmer continues as a director). 

All the indications that I've seen are: no change in the business plan. Private equity's role seems to be to protect the company from the lack of confidence in DRII's strategy among the many Wall Street funds. Remember this company was challenged in a public letter by two hedge funds last October. If the Wall Street fund managers are right and at some future date Palmer's strategy is shown to be unsustainable, then the financial wizards at Apollo will step in and shake things up.


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## pedro47

Sounds like business as usual; David Palmer and his staff are still at Diamond and there were no changes in the upper management tier. Also, sounds like upper management tier sold a lot of stock  to Apollo Global Management and make a big profit .


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