Will You Marriott Me?

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What's going on?

Marriott Vacations, the worlds biggest owner of vacation timeshares, announced its acquisition of rival ILG on Monday for a smooth $5 billion. With ILGs stock up by almost 5%, its investors can put their feet up and enjoy a margarita by the pool.

What does this mean?

FrontFour Capital Group, an activist investor in ILG, has spent the last year pushing the company to sell to a competitor. Earlier this year, FrontFour pretty much threatened to try to oust the board if they refused to sit down and discuss a sale to Marriott or others.


Marriott (which used to be part of the hotel group of the same name) will pay for ILG using both cash and stock (i.e. itll partly pay ILGs investors in shares of Marriott, so theyll own a piece of the combined business). This new mega-company will boast almost $3 billion in revenues from over 100 holiday home locations around the world. And itll have profits of almost $740 million, which should be boosted by annual cost savings of $75 million in the next two years.

Why should I care?

For markets: Activist investors are making it rain.


Activist investors sometimes get a bad rap for calling out companies management teams and publicly demanding they take particular actions (some people say theyre angling for short-term returns rather than helping to generate long-term value). But in some cases, heeding activists advice (like Whitbread did last week) can create changes in the company that benefit all shareholders over the long term.



The bigger picture: Hotel and resort operators are merging globally, pleasing investors.


On Monday, Frances AccorHotels (which owns hotel chains like Novotel and upscale AirBnb challenger OneFineStay) announced it had agreed to buy Movenpick Hotels & Resorts for around $565 million, helping its stock rise by 2%. Accor says this acquisition will help accelerate its growth ambitions in the Middle East, Africa and the Asia-Pacific region and that itll add to the companys overall profits almost right away.

Originally posted as part of the Finimize daily email.

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