50% Upside To This Takeover Target

| About: Diamond Resorts (DRII)


The timeshare industry is consolidating.

Diamond could be the next beneficiary.

Regulatory risk is real but surmountable.

Welcome to the Diamond in the Rough issue of M&A Daily


To a potential buyer, timeshare operator Diamond (NYSE:DRII) is worth about 50% more than its current market price, even after its run over the past few weeks.


Diamond's share price has been beaten down by regulatory concerns. However, these concerns are not enough to derail possible takeover interest. One logical buyer would be Wyndham (NYSE:WYN), which could pay anywhere from $36 to $39 per share for the company.

The big caveat is that the Consumer Finance Protection Bureau is actively looking at one of Diamond's competitors. The CFPB is a serious regulatory agency. In recent regulatory actions in other industries, it has exhibited a broad interpretation of its statutory mandate. Might that lead to trouble for Diamond? It is a question that is worth asking. However, the industry is also ready to play defense; well sponsored legislation is already prepared to limit CFPB's authority over timeshares if it becomes necessary.


The definitive proxy was filed for the Markit (MRKT) acquisition of IHS (IHS). Both companies' shareholder votes are on July 11.


The second amendment to the Medivation (NASDAQ:MDVN) consent revocation statement has been filed for the Sanofi (NYSE:SNY) consent solicitation.


The third S-4 amendment has been filed for the Chemical (NASDAQ:CHFC) acquisition of Talmer (NASDAQ:TLMR). The Talmer shareholder vote is on July 14th and the Chemical vote is on July 19th.


Amsurg (NASDAQ:AMSG) is in talks to merge with Envision (NYSE:EVHC).


Proxy advisor Glass Lewis recommends that Manitoba Telecom (OTCPK:MOBAF) shareholders vote for the acquisition by BCE (NYSE:BCE).


The tender expires today for the ON (NASDAQ:ON) acquisition of Fairchild (FCS).


The tender offer expires today for the Oracle (NYSE:ORCL) acquisition of Textura (NYSE:TXTR).


Bayer (OTCPK:BAYRY) continues to be in talks regarding the possible acquisition of Monsanto (NYSE:MON). More to come in future editions of M&A Daily

Elsewhere on Seeking Alpha

Disclosure: I am/we are long DRII, MDVN, AXLL, TPUB, WR, PLCM.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: Chris DeMuth Jr and Andrew Walker are portfolio managers at Rangeley Capital. We invest with a margin of safety by buying securities at discounts to their intrinsic value and unlocking that value through corporate events. To maximize returns for our investors, we reserve the right to make investment decisions regarding any security without notification except where notification is required by law. We manage diversified portfolios with a multi-year time horizon. Positions disclosed in articles may vary in sizing, hedges, and place within the capital structure. Disclosed ideas are related to a specific price, value, and time. If any of these attributes change, then the position might change (and probably will).

Editor's Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.

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