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Financially troubled Danish toy maker LEGO® Holdings is about to sell four of
the biggest bricks in its empire — its LEGOLAND theme parks.
Danish media have speculated that Blackstone Group, a New York-based private
equity firm is close to an agreement to buy LEGO family entertainment parks.
The deal would be valued at about $461-468 million, according to sources close
to the deal cited by the Wall Street Journal on Tuesday.
The Kristiansen family, which founded the company and still controls it, is
expected to keep a 10% to 15% share of the theme park business, the report said.
Blackstone spokesman John Ford declined to comment on the reported deal and a
LEGO representative didn’t return calls.
LEGO put its four theme parks on the block earlier this year in an urgent effort
to garner some liquidity after suffering a record loss in its toy business. Last
year 2004, LEGO had a net loss of about $335 million as its toy sales declined
in the face of growing competition from China.
The company also faced heavy restructuring and write-down costs.
Blackstone, which has raised almost $6 billion for real estate investments in
North America and Europe, is not a stranger to the theme park business.
Blackstone owns a half interest in the operation of Universal Studios Orlando
and, just last month, it bought London-based Merlin Entertainments for $187
million. Merlin operates 28 tourist attractions in eight European countries
under the Dungeons, Sea Life, Seal Sanctuary and Earth Explorer brands.
The first Legoland park, located next to the company headquarters in Billund,
150 miles west of Copenhagen was opened in 1968. All four Legoland parks
together in Carlsbad, Denmark, England and Germany attract more than 5 million
visitors a year.
The parks feature massive sculptures made of the company’s signature LEGO bricks
along with such traditional theme park fare as roller coasters, water rides and
live-action performances.
Leisure industry consultant Bob Rogers of Burbank-based BRC Imagination Arts
called the pending deal “a head scratcher” because most entertainment companies
would be loath to give up the real estate that supports their intellectual
properties.
“Legoland sells Lego,” said Rogers, meaning that the parks build brand
awareness. “If they view it as just an amusement park then they may be missing a
lot of value to the company.”
LEGO is owned by Kjeld Kirk Kristiansen, grandson of the company’s founder, Ole
Kirk Christiansen. The company isn’t publicly listed but has published earning
reports since 1997.
More about http://www.blackstone.com
-end of report-
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In lugnet.general, Abner Finley wrote:
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Danish media have speculated that Blackstone Group, a New York-based
private equity firm is close to an agreement to buy LEGO family entertainment
parks. The deal would be valued at about $461-468 million, according to
sources close to the deal cited by the Wall Street Journal on Tuesday.
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The key to this article is the word “speculated”. I’ve just read on our intranet
that this rumor is not true. Apparently, we are still in negotiations with more
than one party.
Jake
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Jake McKee
Community Liaison
LEGO Community Team
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In lugnet.mediawatch, Jake McKee wrote:
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In lugnet.general, Abner Finley wrote:
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Danish media have speculated that Blackstone Group, a New York-based
private equity firm is close to an agreement to buy LEGO family
entertainment parks. The deal would be valued at about $461-468 million,
according to sources close to the deal cited by the Wall Street Journal on
Tuesday.
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The key to this article is the word “speculated”. I’ve just read on our
intranet that this rumor is not true. Apparently, we are still in
negotiations with more than one party.
Jake
---
Jake McKee
Community Liaison
LEGO Community Team
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Just a short note... I am just reading the information based on wired services
and other news outlets online. And yes the information is “speculated” not
true information.
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In lugnet.general, Abner Finley wrote:
(snip)
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Leisure industry consultant Bob Rogers of Burbank-based BRC Imagination Arts
called the pending deal “a head scratcher” because most entertainment
companies would be loath to give up the real estate that supports their
intellectual properties.
“Legoland sells Lego,” said Rogers, meaning that the parks build brand
awareness. “If they view it as just an amusement park then they may be
missing a lot of value to the company.”
LEGO is owned by Kjeld Kirk Kristiansen, grandson of the company’s founder,
Ole Kirk Christiansen. The company isn’t publicly listed but has published
earning reports since 1997.
More about http://www.blackstone.com
-end of report-
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Jake said the key word is “speculated”... to me, the key word is “head
scratcher” (well that’s two words)!
I still don’t see why LEGO want to do this, the amount of money they get back
seems a pittance and it loses significant brand equity control... IMHO anyway.
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In lugnet.mediawatch, Larry Pieniazek wrote:
snip
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Jake said the key word is “speculated”... to me, the key word is “head
scratcher” (well that’s two words)!
I still don’t see why LEGO want to do this, the amount of money they get back
seems a pittance and it loses significant brand equity control... IMHO
anyway.
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As long as we are in a speculative mood...why does TLG want to raise money. Are
they contemplating opening a factory in China? Is $450M+ enough to do this?
Oh, I know...they need the cash to buy a slew of new molds for a new as well as
classic door and window system!
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Thomas Main
thomasmain@myrealbox.com
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In lugnet.legoland, Thomas Main wrote:
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As long as we are in a speculative mood...why does TLG want to raise money.
Are they contemplating opening a factory in China? Is $450M+ enough to do
this?
Oh, I know...they need the cash to buy a slew of new molds for a new as well
as classic door and window system!
--
Thomas Main
thomasmain@myrealbox.com
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Ok, replying to my own post...here are some more reasons TLG might want to raise
cash (all purely speculative, of course):
- They are going to attempt to *buy* MegaBloks
- KKK and family is seeking an early retirement
- Realizing Galidor failed because of low up-front investment, a new, revamped Galidor II line will not suffer the same fate as the company is going to put all it resources behind it this time.
- They are going to use the money to invest heavily in their Lego brand stores because Wal*mart is not carrying enough Lego stock.
- They are going to use the cash to close down Lego brand stores because they are not making money.
- Now that Lego Affiliates are creating brand awareness, the parks are redundant
- They will make more money by selling the new owners large Lego sculptures instead of having to give them away.
- They value disorganization and multi-level business practices because it makes the work day more fun for employees
- They would rather sell the parks so someone else has to take the blame for layoffs
- KKK wants to assert his own mark on the compnay by killing all of his father’s ideas.
- It seemed like a good idea after a particularly nauseating tilt-a-whirl ride.
--
Thomas Main
thomasmain@myrealbox.com
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In lugnet.mediawatch, Thomas Main wrote:
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In lugnet.mediawatch, Larry Pieniazek wrote:
snip
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Jake said the key word is “speculated”... to me, the key word is “head
scratcher” (well that’s two words)!
I still don’t see why LEGO want to do this, the amount of money they get
back seems a pittance and it loses significant brand equity control... IMHO
anyway.
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As long as we are in a speculative mood...why does TLG want to raise money.
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Last year 2004, LEGO had a net loss of about $335 million
That might have something to do with it.
Marc Nelson Jr.
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In lugnet.mediawatch, Marc Nelson Jr. wrote:
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In lugnet.mediawatch, Thomas Main wrote:
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In lugnet.mediawatch, Larry Pieniazek wrote:
snip
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Jake said the key word is “speculated”... to me, the key word is “head
scratcher” (well that’s two words)!
I still don’t see why LEGO want to do this, the amount of money they get
back seems a pittance and it loses significant brand equity control... IMHO
anyway.
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As long as we are in a speculative mood...why does TLG want to raise money.
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Last year 2004, LEGO had a net loss of about $335 million
That might have something to do with it.
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Faced with a loss, tactical managers keep doing what they were doing but sell
off valuable/strategic assets (or lay off key people) in order to raise cash to
keep afloat a while longer and avoid the day of reckoning.
Faced with a loss, strategic managers change what they were doing but sell off
underperforming assets (or lay off underperforming people) in order to fund
transformation.
The truth is usually somewhere in between, of course... So which is it here? We
have seen a lot of signs that LEGO, in response to the lossmaking, is changing
what they are doing and some that they are not.
Are the parks strategic assets or underperforming ones? The analyst cited thinks
strategic, thinks they are a vital part of brand management. He could be wrong.
If they’re non strategic, underperforming or even lossmaking (beyond their
strategic value if any to support the brand, which should be factored in when
counting up losses, assuming you can quantify it), this is a shrewd move. If
they’re strategic, it’s not at all shrewd.
This is all second guessing, of course, we have no info to really judge on. But
neither did that analyst, presumably, and he’s thinking not. Of course, if you
ask 10 analysts, you’ll get 11 opinions.
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In lugnet.mediawatch, Larry Pieniazek wrote:
Snip
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Are the parks strategic assets or underperforming ones? The analyst cited
thinks strategic, thinks they are a vital part of brand management. He could
be wrong.
If they’re non strategic, underperforming or even lossmaking (beyond their
strategic value if any to support the brand, which should be factored in when
counting up losses, assuming you can quantify it), this is a shrewd move.
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I think it could be extremely shrewd. The parks will always have to rely on the
company for bricks and sets to sell. For example in Saint Louis, Anheuser-Busch
used to own the baseball stadium and sell their beer there. The team lost money
so they sold it but still sell their beer there for very large profits. Another
thought would be when Ross Perot sold off his company only to buy it back later
for a cheaper price. This could work out quite well for LEGO.
Lego has a press release today denying the sale at this time:
http://www.lego.com/eng/info/default.asp?page=pressdetail&contentid=14959&countrycode=2057&yearcode=&archive=false
Ben E.
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