VAC/ILG shareholder activism speculation [THREAD CLOSED]

[dioxide45]

We were at the Waikoloa property a few weeks ago and they didn’t have any additional insights. However, one sales rep at MOC said they had to wait until next spring when an 18 month t8me frame related to the ILG- Hyatt transaction passed.

Best regards.

Mike

It has been far more than 18 months since ILG acquired Hyatt. Perhaps they were referring to Starwood? Though it has already been 18 months since that happened.

 

[mjm1]

It has been far more than 18 months since ILG acquired Hyatt. Perhaps they were referring to Starwood? Though it has already been 18 months since that happened.

Yes, I meant to say Starwood. I edited my post. She was referring to the time frame that had to pass related the the tax free transaction. I don’t recall the details.

Mike

 

[Helios]

We were at the Waikoloa property a few weeks ago and they didn’t have any additional insights. However, one sales rep at MOC said they had to wait until next spring when an 18 month t8me frame related to the ILG- Starwood transaction passed.

Best regards.

Mike

Thanks. Never heard about this 18 months embargo.

 

[Helios]

Yes, I meant to say Starwood. I edited my post. She was referring to the time frame that had to pass related the the tax free transaction. I don’t recall the details.

Mike

Ok, this clears it.

 

[dioxide45]

Thanks. Never heard about this 18 months embargo.

Not sure there is such an embargo. It was from a sales rep that would actually have zero knowledge about this certain transaction.

 

[Helios]

Not sure there is such an embargo. It was from a sales rep that would actually have zero knowledge about this certain transaction.

You are right, you can’t trust the sales people. Could it be the tax free transaction period that was mentioned subsequently? This is not my field of expertise, so I have no clue.

 

[lizap]

We own both Westin and Hyatt. The new Hyatt system is a mess. There is speculation that Hyatt is having trouble getting inventory for it's new system. Unlike what Marriott did, it is not willing to allow current owners to buy in at a reasonable cost. If Marriott could fix this mess, I'd be for it. There seems to be a complete lack of leadership at the top at Hyatt/ILG.

 

[bizaro86]

You are right, you can’t trust the sales people. Could it be the tax free transaction period that was mentioned subsequently? This is not my field of expertise, so I have no clue.

The reverse morris trust transaction type used for the Vistana spin-off from Starwood requires a two year waiting period or you have the potential of paying tax on the transaction. I think I posted that earlier in the thread (have posted it on Tug before for sure).

The sales rep probably reads Tug, or heard it from someone who does, and is trying to spin it to their own benefit...

 

[hangloose]

Maui sales rep indicated MVC bid for ILG was going through and that soon it will have a combined timeshare program inclusive of Vistana, Westin, Hyatt Residence, etc. They also referenced the 18 month ‘embargo’ since the Marriott Starwood purchase, for dates when a unified program and other changes were coming. Fun to wonder, but not sure this will happen anytime soon.

 

[VacationForever]

Maui sales rep indicated MVC bid for ILG was going through and that soon it will have a combined timeshare program inclusive of Vistana, Westin, Hyatt Residence, etc. They also referenced the 18 month ‘embargo’ since the Marriott Starwood purchase, for dates when a unified program and other changes were coming. Fun to wonder, but not sure this will happen anytime soon.

The lips were moving...

 

[taffy19]

I read this yesterday fwiiw. There were some interesting questions why the high dividend and more.

 

[BigMac]

So Four Front, the financial group that started the merger idea almost a year ago, has written to the ILG stockholders to again make their case. It would seem that there is deep resistance from the current management of ILG. Perhaps as a defensive move they increased the ILG dividend this week. Here is the gist of their letter. Doesn't look like there will be a merger any time soon.

February 21, 2018

Dear Fellow ILG Stockholders,

May 24, 2017 we issued a public letter to the Company's Board of Directors (the "Board") outlining the strong strategic and financial rationale for a combination between ILG and Marriott Vacations Worldwide Corporation ("Marriott Vacations").  At that time, we strongly believed that despite ILG's strong standalone prospects, such a combination would, in our view, maximize value for ILG's stockholders and result in (i) significant cost savings from the elimination of duplicative finance, IT, legal and sales & marketing functions, (ii) robust revenue synergies given the ability to market to a combined Marriott Rewards and Starwood Preferred Guest loyalty program and (iii) the removal of the risk that ILG's Interval International exchange business could be negatively impacted should Marriott Vacations threaten to or actually not renew its contract.  Today, we believe that the financial merits to a transaction have only increased given the recent passage of corporate tax reform, which is a significant benefit to both companies." data-reactid="16" style="margin-bottom: 1em;">FrontFour Capital Group LLC (together with its affiliates, "FrontFour" or "we") is a significant stockholder of ILG, Inc. ("ILG" or the "Company"). On May 24, 2017 we issued a public letter to the Company's Board of Directors (the "Board") outlining the strong strategic and financial rationale for a combination between ILG and Marriott Vacations Worldwide Corporation ("Marriott Vacations"). At that time, we strongly believed that despite ILG's strong standalone prospects, such a combination would, in our view, maximize value for ILG's stockholders and result in (i) significant cost savings from the elimination of duplicative finance, IT, legal and sales & marketing functions, (ii) robust revenue synergies given the ability to market to a combined Marriott Rewards and Starwood Preferred Guest loyalty program and (iii) the removal of the risk that ILG's Interval International exchange business could be negatively impacted should Marriott Vacations threaten to or actually not renew its contract. Today, we believe that the financial merits to a transaction have only increased given the recent passage of corporate tax reform, which is a significant benefit to both companies.

May 2017, we have met with and spoken to a significant percentage of ILG's stockholder base, the overwhelming majority of which indicated that they would be in support of a business combination with Marriott Vacations, as well as Wall Street research analysts and industry participants who unequivocally agree that a potential merger between ILG and Marriott Vacations makes too much sense to ignore.  Over the last eight months, we have continued to have private discussions with the Company's management team and the Board in an attempt to have a substantive two-way dialog regarding a path towards a value creating transaction.  Unfortunately, despite our best efforts, we are concerned that certain social and governance factors are limiting the Board's ability to objectively evaluate such a transaction and represent stockholders' best interests.  Accordingly, on January 29, 2018, we nominated four highly qualified director candidates for election to the Board at the Company's upcoming 2018 annual meeting of stockholders, who we believe will be valuable additions to the boardroom.    " data-reactid="17" style="margin-bottom: 1em;">Since issuing our letter in May 2017, we have met with and spoken to a significant percentage of ILG's stockholder base, the overwhelming majority of which indicated that they would be in support of a business combination with Marriott Vacations, as well as Wall Street research analysts and industry participants who unequivocally agree that a potential merger between ILG and Marriott Vacations makes too much sense to ignore. Over the last eight months, we have continued to have private discussions with the Company's management team and the Board in an attempt to have a substantive two-way dialog regarding a path towards a value creating transaction. Unfortunately, despite our best efforts, we are concerned that certain social and governance factors are limiting the Board's ability to objectively evaluate such a transaction and represent stockholders' best interests. Accordingly, on January 29, 2018, we nominated four highly qualified director candidates for election to the Board at the Company's upcoming 2018 annual meeting of stockholders, who we believe will be valuable additions to the boardroom.

We believe that the refusal to entertain such a compelling transaction in good faith that could both unlock significant stockholder value while also mitigating risk would call into question the Board's ability to satisfy its fiduciary duties." data-reactid="18" style="margin-bottom: 1em;">We urge the Board to engage in good faith discussions with Marriott Vacations regarding a possible business combination and believe that an unwillingness to do so will result in a missed opportunity to (i) garner a sizeable premium to the current ILG share price, (ii) allow ILG stockholder's to participate in the pro forma entity via the structuring of a transaction consisting of a combination of cash and stock, (iii) increase exposure to the faster growth Vacation Ownership business while diluting exposure to the no/low growth Exchange & Rentals business and (iv) remove the risk that Marriott Vacations could not renew its contract with Interval International. We believe that the refusal to entertain such a compelling transaction in good faith that could both unlock significant stockholder value while also mitigating risk would call into question the Board's ability to satisfy its fiduciary duties.

It is our belief that management and certain members of the Board are entrenched, and as a result, significant changes to the composition of the Board are necessary. We are writing you today as agents for all stockholders to ensure biased views and weak governance will not stand in the way of value maximization. We are confident that our nominees, who have significant transactional and operating experience across the lodging, timeshare, gaming, real estate and broader leisure industry, will bring a fresh perspective to the Board that will enable them to represent stockholders' best interests.

 

[hangloose]

The lips were moving...

Yes. MVC rep in Maui was very nice, professional, and no pressure. She was trying to sell me on a 4k DC Pts/Legacy Week Combo package to put me into Chairman's Club status. Total was $29k, so about $7/pt. Push was four fold. First, MVC was buying ILG soon (she said "done deal"...I said "only rumor")...thus changes were coming as MVC adds all Vistana, Westin, Hyatt into the DC Pts program (all available only to Trust owners). Second, MVC Benefit Levels are going to increase soon...so Chairman's will no longer be 15k but higher (17k perhaps). Third, more privileges coming to Presidential and Chairman's once the 18 month embargo is lifted and MVC can announce changes to their program as a result of the Marriott/SPG hotel deal (not sure how this ties into the timeshare side of things, but rather hotel only). Fourth, DC Pts pricing will eventually get to $15-20 per pt, which is where Marriott wanted to start originally if the economy was not down when the program was introduced. Not sure I see any of those happening near term. And the rep was not willing to enroll my resale Hawaii weeks, without an equivalent DC Pts purchase (no surprise). All in all...I said no and thanked her for her time.

Lastly, she did say the Maui Sales Center will start a $3M reno soon to update and add newer technology.

 

[dioxide45]

So Four Front, the financial group that started the merger idea almost a year ago, has written to the ILG stockholders to again make their case. It would seem that there is deep resistance from the current management of ILG. Perhaps as a defensive move they increased the ILG dividend this week. Here is the gist of their letter. Doesn't look like there will be a merger any time soon.

This isn't really that surprising. I had read somewhere early on that the leadership of ILG wanted to retain control of any combined company. I am not sure that VAC leadership wouldn't want the same. So it would take some type of hostile takeover on the part of VAC to make this happen. It seems that if enough ILG stockholders are behind it, they could be successful.

 

[rthib]

Have to laugh about the Marriott/SPG deal being mentioned. As most people forget, including probably this sales rep, Marriott and Marriott Vacations Club are separate companies.

 

[JIMinNC]

I posted this in another thread on the Marriott Vacations Worldwide earnings conference call as part of a larger post on the ILG conference call and the things they said about the new marketing agreements with Marriott International. But given this thread was about the rumored merger offer for ILG by Marriott Vacations Worldwide, I thought this portion should fit here as well.

In their quarterly earnings conference call, the ILG CEO spent a couple of minutes talking about "Strategic Direction", which is often investment/corporate-speak for mergers and acquisitions. The bullets from that brief discussion were as follows:

• They have complete confidence in their current strategic direction and business plan
• The Board is nevertheless committed to exploring all paths to maximize shareholder value
• The company and its advisors are engaged on a variety of strategic opportunities
• The Board has designated a special strategic review committee composed of independent directors to evaluate strategic opportunities and the proper engagement with relevant parties
• The Board, management, and their advisors are in discussions with multiple parties, but there is no assurance that any transaction will result from those discussions.
• He then specifically stated he would answer no questions with regard to the strategic discussions.

I think this was most likely in response to the pressure from Front Four that was mentioned in BigMac's post a few posts up.

 

[BigMac]

I posted this in another thread on the Marriott Vacations Worldwide earnings conference call as part of a larger post on the ILG conference call and the things they said about the new marketing agreements with Marriott International. But given this thread was about the rumored merger offer for ILG by Marriott Vacations Worldwide, I thought this portion should fit here as well.

In their quarterly earnings conference call, the ILG CEO spent a couple of minutes talking about "Strategic Direction", which is often investment/corporate-speak for mergers and acquisitions. The bullets from that brief discussion were as follows:

• They have complete confidence in their current strategic direction and business plan
• The Board is nevertheless committed to exploring all paths to maximize shareholder value
• The company and its advisors are engaged on a variety of strategic opportunities
• The Board has designated a special strategic review committee composed of independent directors to evaluate strategic opportunities and the proper engagement with relevant parties
• The Board, management, and their advisors are in discussions with multiple parties, but there is no assurance that any transaction will result from those discussions.
• He then specifically stated he would answer no questions with regard to the strategic discussions.

I think this was most likely in response to the pressure from Front Four that was mentioned in BigMac's post a few posts up.

Thanks for posting the above. I listened to the webcast this morning. I got the impression their CEO was quite defensive about this. I don't really believe him that " The Board, management, and their advisors are in discussions with multiple parties." . One of the analysts did sneak in a question about their relationship with Marriott Hotels re sales centers after he touted this relationship but what it boiled down to was that they are being allowed to keep the same marketing agreements that they had with Starwood and nothing else.

 

[mjm1]

Here is an interesting development with a potential impact on whether MVC acquires ILG, or at least the price of doing so.

Reuters: ILG explores merger with Apollo's Diamond Resorts
Mar. 21, 2018 4:32 PM ET|About: Apollo Global Management, LLC (APO)|By: Carl Surran, SA News Editor


Vacation timeshare property provider ILG Inc. (NASDAQ:ILG) is exploring a merger with Apollo Global Management's (NYSE:APO) Diamond Resorts International as an alternative to a sale, Reuters reports.

The talks are aimed at giving ILG leverage in case negotiations with Marriott Vacations about a potential buyout are not successful, according to the report.

A merger with APO would add more than 400 of Diamond Resorts' vacation destinations in 35 countries to ILG's 250 managed resorts in 80 countries, and could allow ILG CEO Craig Nash to lead the combined company.

 

[vacationtime1]

Here is an interesting development with a potential impact on whether MVC acquires ILG, or at least the price of doing so.

Reuters: ILG explores merger with Apollo's Diamond Resorts
Mar. 21, 2018 4:32 PM ET|About: Apollo Global Management, LLC (APO)|By: Carl Surran, SA News Editor


Vacation timeshare property provider ILG Inc. (NASDAQ:ILG) is exploring a merger with Apollo Global Management's (NYSE:APO) Diamond Resorts International as an alternative to a sale, Reuters reports.

The talks are aimed at giving ILG leverage in case negotiations with Marriott Vacations about a potential buyout are not successful, according to the report.

A merger with APO would add more than 400 of Diamond Resorts' vacation destinations in 35 countries to ILG's 250 managed resorts in 80 countries, and could allow ILG CEO Craig Nash to lead the combined company.

The idea of an ILG/Diamond merger or acquisition should be terrifying to us in the Vistana world. How long will the StarOption system last when Diamond finds it more profitable to offer a new "Club" with a hefty enrollment fee in its place?

 

[littlestar]

Interesting stuff for sure:

ILG Issues Statement
March 16, 2018 04:05 PM Eastern Daylight Time


MIAMI--(BUSINESS WIRE)--ILG (Nasdaq: ILG) today issued the following statement in response to a public letter from FrontFour Capital Group LLC on March 15, 2018.

“The assertions in FrontFour’s letter are not accurate. While we do not think it is productive to engage back and forth with FrontFour through press releases, and we intend to avoid doing so in the future, we believe it is important to address the issues raised in FrontFour’s letter. ”

FrontFour has spoken to independent directors of ILG’s Board on several occasions, and if FrontFour wants additional discussions with independent members of our Board, we are happy to arrange them.

FrontFour has notified ILG of its intention to nominate four directors for election to the Board at ILG’s 2018 Annual Shareholder Meeting. The ILG Board would like to interview those candidates, but despite our repeated requests, FrontFour has refused to make them available. We encourage FrontFour to make their nominees available for interviews so we can act with full information when determining whether or not to recommend that any of them be added to the Board.

Finally, record dates for annual meetings are customarily set shortly before the definitive proxy statement is mailed to shareholders, and ILG intends to follow that customary practice.”

About ILG

ILG (Nasdaq: ILG) is a leading provider of professionally delivered vacation experiences and the exclusive global licensee for the Hyatt®, Sheraton®, and Westin® brands in vacation ownership. The company offers its owners, members, and guests access to an array of benefits and services, as well as world-class destinations through its international portfolio of resorts and clubs. ILG’s operating businesses include Aqua-Aston Hospitality, Hyatt Vacation Ownership, Interval International, Trading Places International, Vacation Resorts International, VRI Europe, and Vistana Signature Experiences. Through its subsidiaries, ILG independently owns and manages the Hyatt Residence Club program and uses the Hyatt Vacation Ownership name and other Hyatt marks under license from affiliates of Hyatt Hotels Corporation. In addition, ILG’s Vistana Signature Experiences, Inc. is the exclusive provider of vacation ownership for the Sheraton and Westin brands and uses related trademarks under license from Starwood Hotels & Resorts Worldwide, LLC. Headquartered in Miami, Florida, ILG has offices in 15 countries and more than 10,000 associates. For more information, visit www.ilg.com.

Additional Information

ILG intends to file a proxy statement and white proxy card with the U.S. Securities and Exchange Commission (the “SEC”) in connection with its solicitation of proxies for its 2018 Annual Meeting of Stockholders (the “2018 Annual Meeting”). ILG stockholders are strongly encouraged to read the definitive proxy statement (and any amendments and supplements thereto) and accompanying white proxy card when they become available as they will contain important information. Stockholders may obtain the proxy statement, any amendments or supplements to the proxy statement and other documents as and when filed by ILG with the SEC without charge from the SEC’s website at www.sec.gov.

Certain Information Regarding Participants

ILG, its directors and certain of its executive officers may be deemed to be participants in connection with the solicitation of proxies from ILG’s stockholders in connection with the matters to be considered at the 2018 Annual Meeting. Information regarding the ownership of ILG’s directors and executive officers in ILG stock is included in their SEC filings on Forms 3, 4, and 5, which can be found through the SEC’s website at www.sec.gov. Information can also be found in ILG’s other SEC filings. More detailed and updated information regarding the identity of potential participants, and their direct or indirect interests, by security holdings or otherwise, will be set forth in the proxy statement and other materials to be filed with the SEC. These documents can be obtained free of charge from the sources indicated above.

 

[dioxide45]

and could allow ILG CEO Craig Nash to lead the combined company.

I think this is the crux of the issue with a VAC merger. Craig wants to be in charge and I doubt any merger with VAC would go that way.

 

[mjm1]

The idea of an ILG/Diamond merger or acquisition should be terrifying to us in the Vistana world. How long will the StarOption system last when Diamond finds it more profitable to offer a new "Club" with a hefty enrollment fee in its place?

Robert, I agree. I would hate to see Vistana under the Diamond umbrella.

Mike

 

[VacationForever]

Robert, I agree. I would hate to see Vistana under the Diamond umbrella.

Mike

If this happens, I am giving away my Vistana...

 

[bizaro86]

In an ILG/Diamond merger, ILG would be the buyer. They are worth about 2 billion more than Apollo paid for Diamond, and if they offered a premium (to save their ceos job) Apollo would absolutely sell. They care about price and not who would run it after, while the ILG ceo owns a bit of stock but has a great job, so the incentives are different.

 

[nuwermj]

The idea of an ILG/Diamond merger or acquisition should be terrifying to us in the Vistana world. How long will the StarOption system last when Diamond finds it more profitable to offer a new "Club" with a hefty enrollment fee in its place?

I don't understand. ILG would remain in control ("Such a deal could also allow ILG CEO Craig Nash to lead the combined company"). The Diamond leadership would be out (hurray, hurray), and Diamond would be under the Vistana umbrella. What am I missing?