Merlin Entertainments, the company which owns Alton Towers Resort and Thorpe Park Resort, have today announced that they have agreed the terms of a £4.8bn offer for the company from a group of investors, including KIRKBI Invest who own the LEGO Group.

In the deal announced this morning, KIRKBI have formed a new company, Berkely Bidco, alongside Blackstone Core Equity Partners and CPPIB. It is understood KIRKBI will own a 50% stake of the new company with Blackstone and CPPIB jointly owning the other 50%. Prior to this recent announcement, KIRKBI already owned 30% of the shares in Merlin Entertainments and has maintained a significant interest in the company since it sold the LEGOLAND® Parks to Merlin in 2005. Provided all the relevant and required clearances are received, it is expected that the sale of Merlin Entertainments will be completed by the end of 2019.

Once completed, it is intended that Berkely Bidco will continue to operate Merlin as a standalone group with all attractions and behind the scenes support operating as they do now. Whilst each of Merlin’s non-executive directors will be expected to stand down upon completion of the deal (other than KIRKBI chief Executive Søren Thorup Sørensen), Berkely Bidco do not expect to make any significant change to the existing workforce within Merlin.

As a result of the deal, Merlin Entertainments will be delisted from the London Stock Exchange, which it first floated on six years ago. This move to private ownership will allow Merlin’s new owners to increase investment across the company’s portfolio of attractions with the new owners recognising that “significant, long-term investment is required to ensure the longevity of the existing assets and to drive continued growth for Merlin…This unique group of investors is equipped with the appropriate long-term investment horizon, expertise and capital required to realise Merlin’s potential to grow all branded experiences across its Midway Attractions, LEGOLAND® Parks and Resort Theme Parks.”

Whilst the new owner’s long-term plans for Merlin Entertainments have not been confirmed, what has been indicated is that there will be an increased level of Capex in LEGOLAND® Parks, changes to the licensing arrangements for LEGOLAND® Discovery Centres, more flexibility for the LEGO Group to operate education centres and events near the LEGOLAND® Parks and an updating of the LEGO product supply arrangements. There are also suggestions that there could be increased investment in other LEGO branded activities within Merlin, although exactly what this will entail will not be clear until after the sale has completed.

Commenting on the acquisition, Sir John Sunderland, Chairman of Merlin, said:

“Merlin is a global leader in location based, family entertainment, with a unique portfolio of brands and attractions spanning 25 countries and four continents, and with a proven strategy that has delivered over many years. The company has generated meaningful value since IPO, with significant growth in revenue, earnings and cash flow. Following an unsolicited approach by a Consortium of investors, and after rejecting a number of their proposals, the Merlin Independent Directors believe this offer represents an opportunity for Merlin Shareholders to realise value for their investment in cash at an attractive valuation. We are therefore unanimously recommending it to our shareholders.”

Søren Thorup Sørensen, Chief Executive Officer of KIRKBI A/S, said:

“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. 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.”

Joe Baratta, Global Head of Private Equity at Blackstone, added:

“We are pleased to partner with KIRKBI and CPPIB to acquire a business we know very well. 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 with our long-dated investment fund, Core Private Equity, 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.”

Reception of the news of the buyout of Merlin Entertainments has been largely positive, with many hopeful that the deal will lead to a much-needed significant increase in the level of investment across all the company’s attractions. This latest deal marks the largest change in ownership for the attractions since Merlin Entertainments acquired the Tussauds Group back in 2007 which brought the likes of Alton Towers Resort, Thorpe Park Resort, Chessington World of Adventures Resort, and Madame Tussauds under the same ownership as the LEGOLAND® Parks and SEALIFE centres.

What are your thoughts on the change of ownership for Merlin Entertainments? Do you think this is a positive move for the attractions within the company? Make sure you have your say over on the TowersTimes and SouthParks Forum.

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