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Apollo Group looking to buy HGVC [Merged]

Discussion in 'Hilton Grand Vacations Club / HGVC' started by toontoy, Aug 20, 2019.

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  1. CalGalTraveler

    CalGalTraveler TUG Member

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    My biggest fear of Apollo/Diamond is a short-term focus on profits at the expense of customer goodwill for an IPO/sellout if HGVC/Hilton is not in control.
     
    Last edited: Sep 12, 2019
  2. PigsDad

    PigsDad TUG Member

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    Does it matter what we have decided? Not much we can do other than wait and see how it pans out.

    Kurt
     
    hurnik likes this.
  3. DannyTS

    DannyTS TUG Member

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    this is very illustrative of what the Apollo business model is

    https://pitchbook.com/news/articles/apollo-adts-mega-ipo-falls-flat

    Apollo, ADT's mega-IPO falls flat
    By Kevin Dowd
    January 19, 2018
    • Share:
    [​IMG]

    Security specialist ADT has completed one of the priciest PE-backed IPOs in recent memory, selling 111 million shares for $14 each to raise some $1.6 billion and establish an initial market cap of about $10.6 billion.

    Those numbers are big—but ADT and its backers, including Apollo Global Management, were hoping for something a bit bigger.

    The company had originally planned to sell shares for between $17 and $19 each before reducing its expectations in the face of subdued public interest. Initial reports of the possible offering from last summer indicated that ADT had hoped to achieve a valuation of $15 billion. The company lost even more value during its first day of trading, as its stock closed Friday at $12.39, equating to a market cap of about $9.3 billion.

    Even at that reduced price, though, Apollo brought in a 2.3x return on its initial investment, inking profits of $2.4 billion, according to The Wall Street Journal. The firm owned a 100% stake in ADT before the IPO (which was underwritten by Goldman Sachs and Morgan Stanley) and will retain a bit less than 85% of the company's stock, per an SEC filing.

    It didn't take the buyout giant lock to bring the security provider back to the public markets. Apollo had owned ADT for fewer than two years, agreeing to take the business private for $6.9 billion and merge it with existing portfolio companies Protection 1 and ASG Security during February 2016. The deal was finalized three months later.

    Apollo was able to transform ADT's finances during that brief period of ownership. Here's a chart comparing some of the company's key metrics for the first nine months each of 2016 and 2017:

    [​IMG]
    With every action, though, comes an equal and opposite reaction. ADT's debt load has skyrocketed under private equity ownership, rising from about $1.3 billion at the end of 2015 to nearly $10.2 billion as of last September 30, according to an SEC filing.

    As would be expected, much of that debt traces back to Apollo's acquisition of the business. Of the $12.1 billion in total consideration connected to the merger of ADT, Protection 1 and ASG Security, about $3.6 billion covered the assumption of existing debt, per an SEC filing. To further finance the deal, the company took on nearly $1.6 billion in first lien term loans and $3.14 billion in senior secured notes.
     
    hurnik likes this.
  4. terces

    terces TUG Member

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    That is disgusting. Why can't they just leave it alone instead of trying to squeeze blood. C'mon Warren Buffet. Buy this thing and put it on strong footing.....
     
  5. escanoe

    escanoe TUG Member

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    Surely almost anything worth being speculated upon from what little we know from the news reports has been said at least once in this thread.

    Yet I am still find this discussion very useful compared to “Amex Hilton Aspire” one. It is the one thread here that I no longer read new posts on.

    I have greatly enjoyed the cross pollination on this thread from owners that have informed us about the other systems relevant to this discussion.

    One of the things I am curious about: Are any of the market researchers at the companies thinking about buying HGV reading what is being said here? It would be the best way to see what the most informed consumers of HGV think about the product and what our pain points for changes would be. Not that TUGers are typical customers ... but we know a lot about using the product.
     
  6. Tamaradarann

    Tamaradarann TUG Review Crew: Veteran TUG Member

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    I totally agree with you as I stated that most people here believe that that Home Week booking is guaranteed. My comment was in response to JIMinNC's emphatic comment "I don't believe the the HGVC deed provides for a non-revokable required Home Week window".
     
  7. Tamaradarann

    Tamaradarann TUG Review Crew: Veteran TUG Member

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    I agree with you and I would hope any buyer of HGVC would also agree. My concern is with the DRI Collection Trust System which allows the sale of, for instance, Hawaii Collection points based on inventory in other states with lower vacation demand.
     
  8. pedro47

    pedro47 TUG Review Crew: Expert TUG Member

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    This is a very strange thread because there has been no action taken by either parties after more than 30 days.
     
  9. Tamaradarann

    Tamaradarann TUG Review Crew: Veteran TUG Member

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    This wouldn't be the first time that stock price manipulation was done by the big boys!!
     
  10. dayooper

    dayooper TUG Member

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    Won’t be the last either.
     
  11. 1Kflyerguy

    1Kflyerguy TUG Review Crew: Rookie TUG Member

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    Actually there has been some movement. on August 29th Reuters reported that HGV was exploring strategic alternatives, including a possible sale after the takeover interest from Apollo.

    These deals are complicated, and as much as most of the HGV owners are looking for a quick resolution, it may take months to reach a conclusion. I know some of the deals i have been involved with at mt work have actually taken close to a year to negotiate and agree with terms.

    I am no expert, but i have to think the licensing agreements and capital light model with a significant amount of HGV inventory actually owned by 3rd parties has to complicate the mix for any prospective investor.
     
    DannyTS, GT75 and CalGalTraveler like this.
  12. Jason245

    Jason245 TUG Review Crew: Veteran TUG Member

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    Even after a deal is "inked" there is regulatory approval, shareholder votes.. etc... this deal would take about 6 months to close.

    Sent from my SM-N950U using Tapatalk
     
  13. ocdb8r

    ocdb8r TUG Member

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    Is it acceptable to just put my fingers in my ears, sit in the corner and rock quietly to pretend none of this is happening? I don't think I have the energy for any more "timeshare system consolidation". It's all too much to handle with all the MVC/VSN/Hyatt consolidation speculation.

    ;-)
     
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  14. dougp26364

    dougp26364 TUG Review Crew: Veteran TUG Member

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    I sort of do this...... figuratively.

    We owned 2 timeshares with a developer in Branson that went Bankrupt. One ended up managed by Spinnaker, the other by a local individual who ended up stealing the MF’s and bankrupted that timeshares again. Lots of drama with that situation.

    We’ve been thru diamond resorts buying out Sunterra from the DRI side. Drama and lies all around on that one from the sales staff.

    We’ve been thru MVC’s conversion from weeks to points. That went a little more smoothly but it’s been thousands of posts on TUG.

    Now there’s a rumor Apollo is interested in HGVC and, honestly, HGVC appears to have put themselves in a position as a takeover target. If not Apollo it’s likely to be someone else.

    We own at Grand Vacations in Breckenridge, which has 4 resorts and has said that’s it, they’re not going to build anymore. I’m waiting for the shoe to drop on that one as I anticipate they’ll get tired of managing the resorts and see them as a way to fund whatever future projects they want to build (selling out vs borrowing from a bank).

    I’m at a point where it’s “wake me when it’s over”. I have no control other than paying our MF’s. Voting is, IMHO, an exercise in futility. Management companies have always been smart enough to be able to out vote owners, either thru apathy or manipulation (trust management). Owners are largely along for the ride.

    I put my opinion in from time to time, I keep using my timeshares, adapting to the changes and move forward. The rumors and speculation are entertainment only. It’s when the merger actually HAPPENS and the company releases information that TUG becomes valuable. That’s when we figure out what works and what doesn’t. Otherwise it’s an exercise in futility.
     
    klpca, geist1223, GT75 and 3 others like this.
  15. 1Kflyerguy

    1Kflyerguy TUG Review Crew: Rookie TUG Member

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  16. Great3

    Great3 TUG Member

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  17. terces

    terces TUG Member

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  18. SmithOp

    SmithOp TUG Member

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    Blood in the water, the sharks are circling.


    Sent from my iPad using Tapatalk Pro
     
  19. mbinpa

    mbinpa TUG Member

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    For what it is worth...

    I have been a Diamond member for a very long time - I purchased my week when it was Sunterra. I converted to points but did not relinquish my deed or join the trust.

    I have been very happy with Diamond, and am excited and pleased with every acquisition made by Diamond. With the exception of the high pressure sales tactics, which are not unusual in the industry and preventable by saying no and standing your ground, I have found Diamond properties to be relatively high quality, well maintained and well staffed.

    I have a flexible travel schedule but have found that availablilty is excellent if you are not set on a specific resort on a specific week. This is especially true in the big markets like Florida, Hawaii and Williamsburg. My daughters have used Diamond to travel the world, again without too any problems in scheduling and availablility. (Apparently the Diamond affiliated resort in Bulgaria is the best resort in the country and readily available - why my daughter wanted to go there I don't know, but she loved it.)

    I understand the reservations of the members whose resorts are being acquired by DRI, but give it a chance. I am one of the ones who likes Diamond and the company is only growing the number of resorts in it's family. I will be truly excited if this goes through.
     
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  20. Tamaradarann

    Tamaradarann TUG Review Crew: Veteran TUG Member

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    I have had limited stays at Diamond Resorts, but my experience has been favorable and is similar to yours. My concern over Diamond resorts stems from 2 issues. One is I ran the number of points and associated maintenance that is needed for weeks in Hawaii versus my stays in Hawaii using HGVC and DRI cost significantly more. Two is the usage of a trust collection system that is clearly not of homogeneous locations ie. The Hawaii Collection has a number of resorts in Western Continental United States, which are clearing not in Hawaii. However, the Western Continental US resorts does provide DRI with more inventory to sell in that Collection than they have in Hawaii.
     
  21. terces

    terces TUG Member

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  22. escanoe

    escanoe TUG Member

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    Good question. I read it as a way to set one “strategic bidder” apart from the other bids that were private equity bidders. Like it was a company — that was not just investment capitol — that might see the purchase in their strategic interest.

    Update: for more in depth information here is a journal article the Google machine points to that discusses the different strategies of “strategic bidders” as opposed to financial bidders. http://www.mit.edu/~amalenko/stratfin.pdf
     
    Last edited: Oct 3, 2019
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  23. CalGalTraveler

    CalGalTraveler TUG Member

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    My guess is it's Hilton Hotels who would see most strategic value in the ownership.

    1) Conversion of floors/wings of hotel properties is a way to engender loyalty and stability with franchise base. It helps property owners build a steady stream of maint income to offset the ups and downs of hotel room rentals during economic cycles.

    2) They continue to control and extract licensing income on the non-hotel properties (free money)

    3) Protects their brand

    4) They earn rental income from hosting timeshare rentals on their website.

    I sure hope it's them...and they win.
     
    Last edited: Oct 3, 2019
  24. escanoe

    escanoe TUG Member

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    It was not that long ago that they saw it in their strategic interest to spin it off. I am doubtful that is what it is.
     
  25. CalGalTraveler

    CalGalTraveler TUG Member

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    True. However there was a time when acquisitions were in vogue with large tech companies in the Silicon Valley. Now the trend is to spin off and make them smaller.

    The spin-off was a balance sheet move to get the real estate off the books. They might have some fancy financial scheme to make this work. Perhaps they have gotten a group of friendly franchise property investors to come together to buy?
     
    Last edited: Oct 3, 2019
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