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Apollo/Diamond

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ocdb8r

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Apollo Group looking to buy HGVC [Merged]

HGV earnings Oct 31 https://finance.yahoo.com/news/hilton-grand-vacations-announces-third-203100067.html?.tsrc=rss
tugbbs.com

How long before this resurfaces? With the Marriott Vacations Worldwide purchase of Welk (to fold into the Hyatt Residence Club), consolidation pressure will be on. The MVW/Welk deal signals appetite in the market and Apollo is now moving past their founder "issue" and will be back in the market for deals.
 
I think it’ll take more progress on covid before debt markets for these will cover the leverage Apollo wants at attractive rates, I’m sure they are already working on it to be ready as soon as the debt markets open more widely for lodging in general. But anytime in Q2 and beyond is a good guess.
 
Only if you keep talking about it.
I prefer the head-in-the-sand approach.
.
 
ocdb8r said:
I got ya! Just trying to mentally prepare myself should it come back...
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I think this has passed, to a certain extent. I believe the big value in HGVC comes from the affiliation with Hilton and a purchaser would have to make sure the licensing would transfer to the new owners. With Diamonds reputation, Hilton might not want to be associated with them. Last year, HGVC placed a certain restriction on their stock in case there was a hostile takeover attempt (something like they could buy back a certain percentage of ownership at like 10%).

Could something pop up? Absolutely. I believe the further away from these rumors we go, the less likely it’s to happen. That being said, it would be like me to say something like this and the opposite happen like the next day.
 
I am not losing any sleep over this possibility. A lot companies explore mergers / acquisitions and most never come to pass. I personally would be a bit surprised if this resurfaces.

As for for MVC buying Welk to merge into HRC. I think that helps out HRC which was a small network and can't really be merged into the existing Marriott / Vistana network due to the licensing agreement with Hyatt.
 
I agree with @1Kflyerguy that companies explore mergers/acquisitions all the time and I hope this has passed. I wish HGV would make a statement to this affect because the unknown creates FUD (like this thread).

I find it interesting that Apollo didn't try to acquire Welk but perhaps a non-hotel branded timeshare was not of interest.

I wish HGV had purchased Welk because the locations would have been a nice complement to the HGV portfolio namely Tahoe, Breck (more ski capacity), Cabo, and the desert properties. It is possible that MVC bought Welk proactively to competitively keep HGV from purchasing and growing. The locations don't add much to the MVC portfolio but perhaps helps Hyatt which will remain separate.

However, given the linkage to Hilton Brand, and the most recent wings in hotels such as Cabo, District, NYC, HHV it appears HGV strategy is to leverage existing hotel wings/floors into more sustainable revenue streams for the landlords who operate Hilton hotel properties.
 
Interesting that most feel this has likely passed. As I recall this was still very much under discussion, with HGVC having met with both Apollo and Wyndham in January 2020 and analysts pegging a 50% chance of a deal (with the gaiting item being whether Hilton would allow the license to transfer). COVID emerged, killing any chance of a hospitality transaction and it died....but I would have thought it would be back on the table as markets start to gear up for a post-COVID environment. I agree that these things get batted around often and many never come to pass, but I didn't get the sense that this one died because the parties decided there wasn't a good fit or Hilton made clear they wouldn't let the license transfer.
 
ocdb8r said:
As I recall this was still very much under discussion, with HGVC having met with both Apollo and Wyndham in January 2020 and analysts pegging a 50% chance of a deal (with the gaiting item being whether Hilton would allow the license to transfer).
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I am unaware that there were further discussions beyond the original announcement. Can you cite the source of your information and share.
 
CalGalTraveler said:
I find it interesting that Apollo didn't try to acquire Welk but perhaps a non-hotel branded timeshare was not of interest.
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Apollo may have. In October Welk signaled through an investment bank they were looking for a sale and a number of parties were interested. Welk gave Marriott exclusive negotiation rights and a deal was struck. Because Welk is a private company, public bidding was not required so there was little Apollo could do.
 
CalGalTraveler said:
I am unaware that there were further discussions beyond the original announcement. Can you cite the source of your information and share.
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Apollo Remains Lead Bidder for Hilton Grand Vacations (HGV) as Field Narrows, Deal Drags - Sources

The potential sale of Hilton Grand Vacations (NYSE: HGV) is taking longer than expected. Bidding is still said to be in the second round and one private...
www.streetinsider.com

According to the above, a second round of bidding was going on in January 2020, with Apollo being reported as in the lead.
 
ocdb8r said:
Interesting that most feel this has likely passed. As I recall this was still very much under discussion, with HGVC having met with both Apollo and Wyndham in January 2020 and analysts pegging a 50% chance of a deal (with the gaiting item being whether Hilton would allow the license to transfer). COVID emerged, killing any chance of a hospitality transaction and it died....but I would have thought it would be back on the table as markets start to gear up for a post-COVID environment. I agree that these things get batted around often and many never come to pass, but I didn't get the sense that this one died because the parties decided there wasn't a good fit or Hilton made clear they wouldn't let the license transfer.
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The Wyndham/Apollo conversations were over a year ago. I know that COVID hit but the rumor mill had ceased before that. We will never know what was said behind closed doors and I highly doubt that Apollo would come out and say they have stopped pursuing HGVC or what Hilton’s response was. After the initial rumor from the NY Post in August of 2019 subsided, I got the sense that the talk had died down. I know there were reported discussions in December of 2019, but any group can put an offer out there to purchase. That doesn‘t mean that there was a true negotiation, nor does it mean there wasn’t. It just means that someone leaked a number. HGVC would be doing it‘s investors a disservice if they didn‘t look at any reasonable offer.

The main reason Apollo was looking at HGVC was a dip in the value. During the spin off from Hilton, there wasn’t much in the way of development in the high end units (they actually sold out). With the development of The Quinn, Central on 5th, La Pacifica, Maui and the completion of Ocean Towers, they have replenished their stock of high priced, high end units. The burst in development they are doing and continue to do makes me think there will be no merger/takeover. I’m not a corporate takeover expert by no means so I could just be blowing hot air.

This discussion seemed almost political in nature where we were biased based on our preferences (Diamond owners claiming it was happening, HGVC owners being very skeptical). I know I am biased in not wanting it to happen. After time, it seemed like people on both sides dug their heels in with what little info they had and used their interpretations of what little we actually know as proof (very political in nature). I believe the dog chasing its own tail nature of the discussion is what got the original thread closed. Knowing how this thread devolved last time around, I guess my question why bring this up now? Is there new information or rumors floating around out there?
 
Having been part of the finance team several times to be taken out (that never came to pass), it's a guarantee discussions were going on after the announcement and likely to some degree now. 99% of discussions will not be released to the public. Much of whether or not something will happen will depend on the debt markets - typically as a private company, debt leverage is much, much higher so they try to line up good financing and agree on a buyout price with the BoD of the firm they are trying to acquire (HGV in this case). HGVs current share price is higher than before their initial talks and timeshare stocks (wynd, vac, hgv) have done well since the vaccine announcements do a deal would be tougher now, especially coupled with a soft debt market for LBOs right now.
 
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Black did the right thing, resigning. We have been watching this for the past week, and by association it does not make Black guilty of associating with Epstein's girls. He was given information for saving him millions of dollars, alas - we all do that in some form. We use a firm to prepare our taxes and save us money. Epstein is a strange and wicked man (my opinion), but had a gifted mind in other areas. I think Black did the right thing - ....how are ever to know what someone has in their deepest darkest closet???!
 
The Apollo decision maker on matters related to Diamond Resorts is David Sambur. Leon Black dealt with different issues.
 
nuwermj said:
The Apollo decision maker on matters related to Diamond Resorts is David Sambur. Leon Black dealt with different issues.
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That may be true, though i would suspect that an major purchase would be approved by the board. And often changes at the top of company result in a changes in the direction of the entire company.

In the end, its all speculation on our part. I don't think HGV ever indicated they were interested in selling, or even acknowledged specifically which companies they were in talks with. They only addressed the rumors with very broad and vague responses.

The travel and finance world today is a bit different from the world of prior to the pandemic and this deal may not seem as attractive to Apollo as before..
 
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