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LEGOLAND owner Merlin Entertainments has emerged from the rubble of failed IPO
From: The Telegraph.
Last year, Merlin Entertainments, owner of LEGOLAND theme parks, seemed to be
buiding towards something big - a stock market flotation.
In the preceding years it had acquired several key tourist attractions,
including the LEGOLAND theme parks, Madame Tussauds and the London Eye.
Indeed, on January 15, 2010, it bought the closed Cypress Gardens theme park in
Winter Haven, Florida, with the intention of taking LEGOLAND to the East coast
of the US (it already has LEGOLAND California on the West coast).
It had performed strongly during the recession, and recorded strong 8pc annual
growth and £230m of earnings before interest, tax, depreciation and amortisation
(Ebitda).
But just a month after the Florida purchase, it abandoned the IPO plans. The
group - which was then backed by private equity firm Blackstone and Dubai
International Capital - had fallen victim to a loss of appetite in the market.
Fund managers, which at the time were very cautious about debuts by
private-equity backed companies, said that not enough equity was left on the
table when debt levels were brought down to fit with the stock market.
“We have pumped £80bn into the stock markets already – but these were for
companies where we already owned equity,” said Andy Brough, a fund manager at
Schroders.
“In these private equity floatations, where is the upside for investors if all
we are doing is re-financing the companies where the PIK notes are eating up
everything in sight?”
But with a debt to Ebitda ratio of five times, Merlin was among the most
under-geared companies in the leisure sector in February 2010.
After the aborted flotation, Blackstone sold 20pc of the company to the private
equity firm CVC Capital Partners, reducing Blackstone’s holding to 34pc. CVC
acquired another 8pc from the Dubai investment fund, giving it 28pc in all.
KIRKBI, a Danish family trust that owns LEGO, also increased its stake, emerging
as the largest shareholder, with 36pc.
CVC paid a price that valued Merlin at £2.25bn.
Rather than rest on its laurels, Merlin was on the lookout for acquisitions. An
opportunity appeared in late 2010. It was announced that the group would buy
about A$115m (£75.6m) worth of entertainment attractions located in Australia
and New Zealand from Village Roadshow Theme Parks and Attractions. The sale,
which was finalised in March, included Sydney Aquarium, Sydney Wildlife World,
Oceanworld Manly, Sydney Tower and the Koala Gallery in Australia, in addition
to Kelly Tarlton’s Underwater World in New Zealand.
Merlin is also planning to open LEGOLAND parks in Malaysia and Dubai in *2013
and 2015 respectively.
The building blocks of the next chapter in Merlin’s story appear to already be
in place.
Telegraph.co.uk
pc=percent
(*) Correct year for LEGOLAND Malaysia should be 2012.
-end of report-
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