ILG Is Said to Face Activist Pressure to Strike MergerBy
FrontFour may try to replace directors if deal isn’t reached
CEO’s price expectation is said to complicate potential deal
Timeshare operator ILG Inc. is likely to face a proxy fight early next year if it doesn’t strike a deal to merge with Marriott Vacations Worldwide Corp. or one of its competitors, people familiar with the matter said.
Activist investor FrontFour Capital Group disclosed a 2 percent position in Miami-based ILG in May and urged the company to merge its operations with Marriott Vacations at a meaningful premium. FrontFour is expected to run a dissident slate of board nominees at ILG’s annual general meeting early next year if a deal with Marriott or another competitor isn’t reached by then, said the people, who asked not to be identified because the details are private.
Shares of ILG rose as much as 3.1 percent Thursday and were up 1.5 percent to $26.26 at 1:53 p.m. in New York, giving the company a market value of $3.3 billion.
ILG hired Moelis & Co. to advise it on a potential transaction after Greenwich, Connecticut-based FrontFour unveiled its stake and proposal. A sticking point in getting a deal done is ILG Chief Executive Officer Craig Nash, who has been with the company and its predecessor Interval International since 1982. A potential merger is being held up because Nash has high valuation expectations and wants to play a role at the combined company, the people said.
A representative of ILG declined to comment, and FrontFour didn’t respond to a request for comment.
ILG is the exclusive global licensee for the Hyatt, Sheraton and Westin brands in vacation ownership, according to its website.
FrontFour, which was formed in 2006, won three seats on the board of Canadian industrial landlord Granite Real Estate Investment Trust in June.
— With assistance by Gillian Tan