Diamond Resorts to acquire Sunterra Corp. for $700 million

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Sunterra Corp., which operates a portfolio of nearly 100 vacation-ownership resorts around the world, is being acquired for $700 million by Diamond Resorts, which intends to take the company private.

Under the definitive agreement signed with Sunterra, Diamond Resorts will acquire the company for $16 a share, a 35% premium over the Sunterra's closing stock price on March 8.

The acquisition is expected to be completed by the end of the second quarter.

Diamond Resorts, which specializes in developing, marketing and managing vacation-ownership properties, intends to retain Sunterra's staff and its headquarters in Las Vegas.

Diamond Resorts plans to renovate many Sunterra resorts and to develop resorts in several new markets.

"I am very interested in Mexico, Central America and Asia," said Stephen Cloobeck, chairman and CEO of Diamond Resorts.

Diamond Resorts also plans to develop a brand identity for Sunterra.

In terms of developing brand identities for vacation-ownership resorts, Cloobeck said, "Hilton has done a nice job. So have Marriott, Four Seasons, Hyatt and Disney. We believe the time has come for an entrepreneurially based private company to do the same."

Diamond Resorts' portfolio of vacation-ownership properties includes the Jockey Club and the Carriage House, both in Las Vegas.

Sunterra has more than 326,000 owner families with more than 96 properties controlled by or affiliated with the company in the U.S., Canada, the Caribbean and Europe.

The vacation-ownership segment is one of the fastest-growing in the lodging industry. According to PricewaterhouseCoopers, sales of vacation-ownership properties reached $8 billion in 2004, the most recent figures available, compared with just a little more than $1 billion in 1994.

To contact reporter Michael Milligan, send e-mail to [email protected].

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