Starwood Hotels & Resorts Worldwide Inc. has agreed to spin off and sell its timeshare unit to Miami-based Interval Leisure Group Inc. in a deal valued at about $1.5 billion.
The transaction for the unit, called Vistana Signature Experiences, includes 22 timeshare resorts with more that 220,000 owners and more than 5,000 employees, according to a statement from both firms on Wednesday.
"What this does for ILG is create a clear industry leader with an expanded platform for growth," said Craig Nash, chairman, president and CEO of Interval Leisure Group.
Miami-based Interval Leisure will merge its board with Vistana’s after the acquisition. Starwood shareholders will retain a 55 percent stake in Vistana after the deal, according to the statement.
“We believe that this combination will create more value for our shareholders than a standalone path,” Adam Aron, Starwood’s interim chief executive officer, said in the statement. “Not only are the economics better, but being part of a larger organization ensures more growth opportunities for the business and our associates.”
Starwood, which owns the Sheraton and W brands, in February announced a plan to spin off its timeshare unit. In June, the firm said it would list that division as Vistana Signature Experiences Inc. on the New York Stock Exchange by the end of this year.
Starwood said in April that it was exploring strategic and financial alternatives to increase shareholder value and hired Lazard Ltd. to help in the effort.
Nash said talks to acquire Vistana started a few months ago; the transaction, valued at about $1.5 billion, is expected to close in the second quarter of 2016. Last year, ILG acquired Hyatt Vacation Ownership, which includes 16 resorts.
Nash said the Vistana purchase is similar to the Hyatt deal, although on a much larger scale.
The deal will give Interval Leisure rights to use the Sheraton and Westin brands in vacation ownership, while allowing existing timeshare owners in those resorts to continue using the to the Starwood Preferred Guest program.
"To the consumer, they won’t see any difference," Nash said. "Hopefully we’ll be able to add more benefits and services."
He said the move was a major one for Interval, a company with a $1.03 billion market capitalization which has headquarters in South Miami. The company is best known for its Interval International unit, a membership service that facilitates exchanges of timeshare properties. But ILG has acquired several other companies since 2007 in an effort to grow and diversify its operations.
"This is a great thing for Miami," Nash said. "This is a company on the move; we go from a small cap to a mid cap. We're the leader in upper upscale for this space."
Miami Herald staff writer Hannah Sampson and Bloomberg news service contributed to this report.