BY Richard Summerfield
A consortium including private equity giant Blackstone, the Canada Pension Plan Investment Board (CPPIB) and KIRKBI, an investment vehicle controlled by the founding family of the Lego brand, have agreed a deal to acquire Merlin Entertainments for around $7.5bn.
The deal, which will take Merlin off the stock market, is one of the biggest European private equity deals in recent years, and will allow the company to invest more in its assets and deliver on growth plans.
The 455 pence per share offer is the third attempt by the group led by KIRKBI to take Merlin – the theme park operator which runs the Legoland attraction, Madame Tussauds and the London Eye – private, having unsuccessfully proposed a price of 425 pence.
Once the deal has been completed, KIRKBI will own 50 percent of Merlin, while the other half will be jointly owned by Blackstone and CPPIB. The deal will see the consortium assume $1.1bn of Merlin’s outstanding debt.
Shares in Merlin have suffered in recent years; falling below their IPO price following a 2015 accident on a rollercoaster at the firm’s Alton Towers theme park and the 2017 terrorist attacks in London. In May, activist investor ValueAct Capital called on Merlin to take itself private given the level of investment needed in the company. Those calls appear to have been heeded.
For Blackstone and KIRKBI, the deal to acquire Merlin is something of a homecoming. In 2005, Blackstone paid $105m to acquire the company, with KIRKBI also taking a stake in the firm. The company launched a $5.6bn IPO in 2013 which saw Blackstone’s stake in the company valued at over $1bn.
“As the long-term owner of the Lego brand and as a strategic shareholder in Merlin since 2005, we have great pride and passion for this amazing company, its management team and its employees,” said Søren Thorup Sørensen, chief executive at KIRKBI. “With a shared understanding of the business and its culture, we believe that this group of investors has the unique collective resources necessary to equip Merlin, including the Legoland Parks and Legoland Discovery Centres, for their next phase of growth. We are committed to ensuring Legoland and the other activities in Merlin reach their full potential, which we believe is best pursued under private ownership, in order to deliver fantastic experiences to visitors of all ages around the world.”
“We are pleased to partner with KIRKBI and CPPIB to acquire a business we know very well,” said Joe Baratta, global head of private equity at Blackstone. “We are prepared to commit the substantial resources required to support the long-term objectives of Merlin, which will require significant investment to ensure its long-term success. We believe we are uniquely placed through our Core private equity strategy to make this investment alongside our partners at KIRKBI and CPPIB. We look forward to backing Nick Varney and his strong management team in driving Merlin into the future.”