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Hilton Grand Vacations Inc. (Hilton) and its board of directors have been hit with a lawsuit for allegedly lying to shareholders and misleading them in the company’s acquisition of Diamond Resorts.
The lawsuit was filed on May 7 in New York by lead Plaintiff Marina Clough, who alleges that the company and its board have violated the Securities Exchange Act.
In March, Hilton announced that it had entered into a definitive agreement to acquire Diamond Resorts International, Inc. from funds managed by affiliates of Apollo and Reverence Capital Partners, and other Diamond stockholders, in a stock-based transaction.
According to the lawsuit, a proxy statement recommended that Hilton shareholders vote in favor of the proposed transaction, that would see Apollo Funds and other Diamond stockholders receive 34.5 million shares of Hilton common stock to a value of $1.4 billion.
Upon transaction close, existing Hilton shareholders will own approximately 72 percent of the combined company and the Apollo Funds will own approximately 28 percent of the combined company, according to the lawsuit.
However, the claim states that the proxy statement omits and misrepresents material information concerning Hilton’s and Diamond’s financial projections; the financial analyses performed by Hilton’s financial advisor, Bank of America Securities, Inc. in connection with its fairness opinion; and potential conflicts of interest involving Bank of America (BOA).
The claim says that BOA failed to disclose the true earnings of Diamond Resorts and the true revenue and cost projections, and it also failed to disclose possible conflicts of interest.
“With respect to the [Hilton Grand Vacations] HGV Forecasts, Adjusted Diamond Forecasts, and HGV Pro Forma Forecasts for Combined Company, the Proxy Statement fails to disclose: (1) all line items underlying (i) Total Revenues (Excluding Cost Reimbursements), (ii) Adjusted EBITDA, and (iii) Unlevered Free Cash Flow; (2) Hilton’s, Diamond’s, and the pro forma combined company’s net income projections;1 and (3) a reconciliation of all non-GAAP to GAAP metrics,” the claim states.
According to the lawsuit, disclosure of that information is material because it would provide the company’s shareholders with a basis to project the future financial performance of the Hilton and Diamond Resorts, and would allow shareholders to better understand the financial analyses performed by the company’s financial advisor in support of its fairness opinion.
“Shareholders cannot hope to replicate management’s inside view of the future prospects of the Company.”
The deal is expected to close in the summer of 2021. In the event the transaction is consummated, Clough may seek to recover damages resulting from Hilton’s misconduct, the claim states.
Clough is suing for violations of the Securities Exchange Act and seeks an order of enjoinment, possible damages, legal fees, and a jury trial.
Hilton isn’t the only company facing legal action for alleged violations of the Securities Exchange Act. Recently, shareholders of online luxury-goods marketplace The RealReal filed a class action lawsuit alleging that members of the company’s executive team, board of directors, and underwriting banks lied to shareholders, artificially inflating share prices.
Do you hold shares in a company that you think has violated the Securities Exchange Act? Let us know in the comments section!
Clough is represented by Daniel Sadeh and Zachary Halper of Halper Sadeh LLP.
The Hilton Securities Exchange Act Violations Lawsuit is Clough. v. Hilton Grand Vacations Inc., et al., Case No 1:21-cv-02583, in the United States District Court Eastern District of New York.
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57 thoughts onHilton and Its Board Made False Statements to Shareholders About Diamond Resorts Acquisition, Lawsuit Claims
Same story as most of these, how do I join. I don’t want money back, I just want out….
My fiancé and I bought into DCI around July of 2021 thinking we were benefiting as we take a lot of vacations each year. Went to an “orientation meeting” where they simply tried to up sale us (very aggressively) when we hadn’t even been able to experience what our current points could do for us. We went to another ownership meeting in May 2022 because we were interested in seeing what HGVC buying over DCI meant for us as owners. We ended up getting convinced to purchase more points into the HGVMax program, thinking we would be able to use after 45 days of our account being transferred. Come 2-3 months later, we now have a bill for an outrageous amount of fees due (over $1,000 more than expected) AND we are not even able to utilize HGVC properties still. Each time we call the time line is pushed back further and further to utilize these properties. Are we able to join in on the class action law suit?
We did not buy into hgv and sre trying to find a way out. They lie too much & I’m over it!!
Same here! We came to their new member orientation but it was another tactic to sell us more, 15k more. We bought diamond resorts in hawaii come to find out today that the yearly maintenance fees go up every year at 7%!!! I had a complete meltdown in their sales office crying, shaking and wanting to throw up…DR Hawaii NEVER mentioned this! This is financial suicide and we would have NEVER put this noose around our neck. Also, they said because we declined their new lower financing option for 15k more we CANNOT go to HGV! We want to join in this lawsuit.
My wife and I also bought into the Hilton upgrade and were told they would combine both Diamond and Hilton points. When we went to the update in South Lake Tahoe we were told they weren’t combine even though we paid more money so now we have more money owed. We were also told we can use point to vacation anywhere, but when we attempt to speak about European vacation or Mexico, we are told we can’t go there. We would like to join the class action suit.
I am interested joining this law suit. Diamond Resorts continues to lie about the services available. I foolishly purchased the upgrade with Hilton on May 6, 2022, only to be told today (7/28/2022) it won’t be available to use till the end of the year. When I purchased on May 6, I was told that it would take 45 days to activate the new program. Additionally, if I moved my points into Hilton Grand or Hilton Club, my point would never expire. A representative from Diamond Resorts just informed me that I will loose 11,000 points because I didn’t save them with Diamond earlier this year. I could go on and on about the fraudulent activity of this company.
We have been lied to every time we go to the so called updates, which are hard sell tactics that force you to buy more points in order to achieve a higher tier or a lower maintenance fee. At this higher tier one has more leverage to phone in earlier to book a desired room at a desired resort. One year we bought more points to lower our maintenance fees, which it did not. Last year 2021 we bought to become Centum members. We were told that is the highest tier and we would not have to attend these updates anymore, plus it came with many great perks, but that was not the case. This year we were told we were not Centum anymore due to Hilton’s acquisition which terminated this arrangement that we purchased. We were told this July, 2022 that we would have to purchase 7000 additional points to achieve HGV MAX. My husband and I nearly bought again but we realized what they are having us do every year or two is unsustainable. At this time we are looking to return our timeshare but we do not know how to force this with Diamond or Hilton. Looking for assistance
I want to know how to get into this lawsuit. my husband and Myself have been lied to for 11 years and its cost us over $30,000 BS. just another $10.000 we were promised our Deed never got it nor did I get docment my name put on it, They lie and steal I want in on this law suit how 7604225655
It’s unbelievable that the sales pitch, while we were upgrading our Diamond time share in 2021, was that we would be fully integrated into the Hilton system. They just left out that it would cost us another $18000. I find it hard to believe the Diamond owners don’t have any recourse.
How can we get in on class action lawsuit?