A Las Vegas-based luxury timeshare resort company is being sold to a private investment management company for $2.2 billion, the company announced Wednesday.
Diamond Resorts International, which has a network of 420 properties in 35 countries, said the all-cash deal with affiliates of Apollo Global Management represents a premium of 26 percent over the company’s closing stock price on Tuesday.
While the price also is 58 percent higher than the closing price on Feb. 24, the day Diamond announced plans for exploring “strategic alternatives,” two law firms have launched investigations into whether Diamond executives breached their fiduciary responsibilities by not seeking a higher price.
The San Diego firm Johnson & Weaver launched its investigation after learning of the proposed deal, which is expected to close within a few months.
Wilmington, Delaware-based Andrews & Springer also is looking into breach of fiduciary duty claims.
“We have built a solid business focused on operational excellence, hospitality and customer satisfaction, the result of which has been stellar financial results and strong cash generation,” Diamond CEO David Palmer said in a statement announcing the sale. “This transaction is an excellent outcome for our shareholders.”
Among the company’s properties are the Polo Towers on the Strip and the Cancun Resorts Las Vegas on Las Vegas Boulevard South.
Apollo is a global investment manager with offices worldwide. Apollo had assets under management of approximately $173 billion as of March 31 in private equity, credit and real estate funds invested across a core group of nine industries where Apollo says it has considerable knowledge and resources.
A representative of Apollo, a company that partnered with TPG Capital in January 2008 to acquire what is now Caesars Entertainment, said the deal represents an opportunity to grow the company.
“Stephen (Cloobeck, Diamond’s founder), David (Palmer), the management team and Diamond’s more than 8,000 team members have built an amazing customer-centric business with a great reputation that delivers award-winning hospitality experiences at great value,” Apollo partner David Sambur said in a release. “We look forward to bringing Apollo’s resources to bear and working with the Diamond Resorts team to continue to grow and enhance their business.”
The Andrews & Springer investigation was announced Monday while the Johnson & Weaver probe was unveiled Wednesday and officials with the firms say they’re based on whether the sales price of $30.25 a share was high enough for investors. Johnson & Weaver noted that one Wall Street analyst published a target price for the stock of $35 a share.
Diamond shares closed up to $29.79, more than 23 percent, in heavy trading.
Contact Richard N. Velotta at firstname.lastname@example.org or 702-477-3893. Find him on Twitter: @RickVelotta