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Why Bluegreen Vacations Stock Has More Than Doubled Today

Motley Fool - Mon Nov 6, 2023

Bluegreen Vacations(NYSE: BVH) stock is shooting through the roof in Monday's trading following news that the company is on track to be acquired by Hilton Grand Vacations(NYSE: HGV).

Bluegreen's share price was up 105.6% as of 12:45 p.m. ET, according to data from S&P Global Market Intelligence. Meanwhile, Hilton's share price was down 7.5%.

Hilton will pay a premium to buy Bluegreen

Bluegreen Vacations published a press release this morning announcing that it had agreed to be acquired by Hilton Grand Vacations. Hilton will pay a price of $75 per share to buy Bluegreen in an all-cash deal.

The buyout price represents an enterprise valuation of $1.5 billion for Bluegreen Vacations, including the company's debt. The acquisition is expected to close in the first half of 2024, and the stock has skyrocketed close to the $75-per-share buyout price.

Is Bluegreen Vacations stock a buy?

As of this writing, Bluegreen Vacations is trading at roughly $73 per share. Assuming that the buyout by Hilton is completed, investors would see a return of roughly 2.7% upon the closing of the acquisition.

There's very little chance that the deal will be challenged or blocked on antitrust grounds, and the all-cash nature of the buyout means that Bluegreen shareholders don't need to worry about fluctuations in Hilton's stock price. But even though the odds that the deal will be completed are very good, piling into Bluegreen stock probably doesn't make much sense for most investors right now.

For starters, a 2.7% return sometime between now and the end of 2024's first half isn't much. While the deal will very likely close, there's still a small risk that its completion will be delayed.

Investors can get comparable rates of return with some high-interest savings accounts with essentially zero downside, so it's probably best to stay out of Bluegreen stock right now. Conversely, if you already hold the stock, now could be a good time to take some profits.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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