Both Diamond and Bluegreen said Monday that they have both signed a non-binding letter of intent that calls for Diamond Resorts to pay $15 per share or $500 million for Bluegreen, not including the company's outstanding debt, which is estimated at $365 million.
The offer price was more than double Bluegreen's $6.44 share price late Monday, when the deal was first announced. Bluegreen had calculated its book value at $12.37 per share, and its 52-week high was $11.85 until Tuesday, when shares traded at 10 times their normal volume and closed at $12.04, up 87% on the day, after trading for as high as $12.54.
Diamond Resorts, which last year acquired Sunterra Corp. for $750 million, is one of the largest vacation ownership companies in the world with 110 branded and affiliated resorts in 14 countries with destinations throughout the continental United States and Hawaii, Canada, Mexico, the Caribbean and Europe. The company has upward of 360,000 owners and members and more than 5,500 associates worldwide.
Bluegreen Corporation is the parent company of both Bluegreen Resorts, which markets a flexible, real estate-based vacation ownership plan that provides access to over 40 resorts and an exchange network of over 3,700 resorts, and Bluegreen Communities, which sells home sites. In addition to leading Bluegreen, Levan also is chairman and chief executive of Woodbridge Holdings Corp., which owns 9.5 million shares of Bluegreen common stock. In its letter to Levan, Diamond Resorts said that approximately 85% of the offer price is for the timeshare segment of the company and the remaining 15% approximately is for Bluegreen Communities.
As part of the non-binding deal, Diamond Resorts has the exclusive right to negotiate with the company until Sept. 15. If after that the two enter into a binding agreement at $15 per share or some other price, Diamond Resort said in a letter to company chairman Alan Levan that it would agree to a customary "go shop" provision for a publicly traded company, permitting Bluegreen to actively seek transactions providing greater value to the Company's stockholders.
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