Hilton Grand Vacation buys Blue Green Vacations

NATIONAL REPORT – Hilton Grand Vacation (HGV) has entered into a definitive agreement to acquire Bluegreen Vacations for $75 per share in an all-cash transaction, representing total consideration of approximately $1.5 billion, inclusive of net debt.

The acquisition is expected to expand and diversify HGV’s portfolio and lead flow through Bluegreen Vacations’ partnerships, including an exclusive marketing agreement with Bass Pro Shops. HGV also announced that it has signed a new 10-year exclusive marketing agreement with Bass Pro Shops.

The deal increases HGV’s membership base from more than 525,000 to more than 740,000 and its resort portfolio from 150 to nearly 200 properties in 14 new geographies and eight new states.

A complementary footprint of predominantly drive-to locations will double HGV’s presence along the east coast and expand the number of available outdoor and ski destinations while increasing sales distribution in new key markets.

How does this deal work? Truist Securities analyst C. Patrick Scholes suggest that by plugging Bluegreen into HGV's best-in-class marketing system, but added that one of the major challenges with an independent vacation ownership company like Bluegreen is that they do not have a well-recognized brand like HGV and subsequently customer acquisition cost is significantly higher. He added that Truist believes HGV will apply lessons learned from their recent acquisition of independent-branded Diamon Resorts and the subsequent roll-out of HGV’s Hilton Vacation Club brand, HGV Max membership offering, and the HGV Ultimate Access experiential platform.

HGV projects ~$100 million in projected cost synergies expected to be achieved in the first 24 months following close and significant future cost synergy opportunities across G&A, sales, marketing and resort operations. It expects to generate future revenue synergies of $75 million to $100 million, more than offsetting future incremental license fees.

The combined company is expected to generate adjusted free cash flow conversion of adjusted EBITDA in the range of 55% to 65% in a steady state, enabling the continued pursuit of the company’s capital allocation strategy – including the return of capital to shareholders.

The transaction, which was unanimously approved by the Board of Directors for both companies, is expected to close during the first half of 2024.

HGV’s management team, including president and CEO Mark Wang, Chief Financial Officer Dan Mathewes, and Chief Operating Officer Gordon Gurnik, will continue to serve in their current roles upon transaction close.