An investor group that includes the family behind the Lego empire has agreed to buy Merlin Entertainments PLC, the operator of Legoland resorts and Madame Tussauds wax museums, for about ￡4.8 billion (US$6.1 billion).
Merlin investors would receive ￡4.55 per share, a premium of 15 percent over its closing price of ￡3.95 on Thursday.
The deal, which continues a run of major private equity investments in Europe, is also backed by Blackstone Group LP and the Canada Pension Plan Investment Board.
Merlin shares yesterday surged 14 percent, trading just below the offer price at ￡4.51 in London.
Investors had pushed the company to consider a buyout, saying it would be worth more in private hands.
ValueAct Capital, which also lobbied for change at Britain’s Rolls-Royce Holdings PLC, said in an open letter to Merlin’s board last month that it needs to spend more on new hotels and Legoland parks and that is hard to do as a public company.
The Merlin bid is 37 percent higher than the closing price on the day before ValueAct’s letter. It values the company at about 12 times Merlin’s underlying earnings before interest, taxes, depreciation and amortization for last year.
“We regard this as a very attractive offer,” Merlin chairman John Sunderland said in a telephone interview.
The bidders made four unsolicited approaches, the first of which was in May before ValueAct’s letter, he said.
GROWING CASH RESERVES
The deal continues a run of major deals as public companies are being taken private thanks in large part to buyout firms’ swelling cash reserves.
The private equity industry, including real estate, debt and venture funds, is sitting on about US$1.4 trillion in unspent cash, according to data compiled by Bloomberg, as institutional investors pour client money into the funds seeking returns.
Private-equity buyouts targeting European companies and announced this year have totaled US$43.4 billion, according to data compiled by Bloomberg.
Activity has accelerated with recent transactions like KKR & Co’s move to buy out minority shareholders in German publisher Axel Springer SE.
SETBACKS
Merlin has had a number of setbacks in the past few years, including a ￡5 million fine following a 2015 accident at its Alton Towers theme park in the UK in which 16 people were injured, while the Brexit vote a year later hampered its growth potential.
A Legoland being built in Goshen, New York, has also suffered from a series of regulatory and construction delays.
In addition to operating Legoland and Madame Tussauds, the company oversees attractions such as Peppa Pig World of Play and the Coca-Cola London Eye.
The company is planning another Legoland park in South Korea and is looking for sites in China, where it would like to run three by 2030, Sunderland said.
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