Hilton Grand Vacations to buy Apollo-backed Diamond Resorts in $1.4B deal

Funds managed by Apollo Global Management Inc. and Reverence Capital Partners LLC affiliates and other Diamond Resorts International Inc. stockholders agreed to sell the timeshare operator in a stock-based deal with a roughly $1.4 billion equity value.

Hilton Grand Vacations Inc. will acquire Diamond, the largest independent timeshare company, according to a release. The merged entity will have 720,000 owners, 154 resorts and 48 sales centers.

The merger will generate more than $125 million in run-rate cost synergies, expected to be achieved in the first 24 months following close, among other benefits.

Under the deal terms, the selling stockholders expect to receive 34.5 million Hilton Grand Vacations common shares. Upon closing, existing Hilton Grand Vacations shareholders will own about 72% of the merged entity, with the selling stockholders accounting for the rest.

The deal received approval from the respective boards of both companies and is expected to close in the summer, subject to closing conditions and regulatory approvals. The issuance of Hilton Grand Vacations common shares is subject to shareholder approval.

Upon closing, Hilton Grand Vacations' management team will continue in their current roles and the company's board will be upsized to nine members from seven. The selling shareholders will have the right to appoint two directors as long as their equity ownership in the company remains at or above 15% of the outstanding stock at closing and one director as long as their equity ownership remains at or above 10%.

BofA Securities is financial adviser to Hilton Grand Vacations, while Alston & Bird LLP, Simpson Thacher & Bartlett LLP and Foley & Lardner LLP are its legal advisers.

Credit Suisse is lead financial adviser to Diamond and Goldman Sachs is also financial adviser to the company, while Paul Weiss Rifkind Wharton & Garrison LLP is its legal adviser.

Hilton Grand Vacations received financing commitments from BofA Securities, Deutsche Bank and Barclays, with PJT Partners acting as capital markets adviser.