Lego owners lead £5 billion acquisition of Merlin Entertainments

June 28, 2019

Merlin Entertainments has agreed to be acquired by investors led by the owners of Lego in a deal that values the global attractions operator at £5 billion (US$6.35 billion).

Merlin Entertainments has agreed to be acquired by Berkeley Bidco Limited, a new company jointly owned by Kirkbi, the investment vehicle of Lego’s Kirk Kristiansen family, Blackstone Core Equity Partners and Canadian pension fund CPPIB.

Kirkbi already owns almost a third of Merlin’s shares and says it does not expect the deal to lead to any significant changes.

Kirkbi will own 50% of Merlin, while 50% will be owned by CPPIB and Private equity firm Blackstone.

Blackstone said it had the "substantial resources" required to support Merlin's long-term plans "which will require significant investment to ensure its long-term success".

Merlin is the second-largest operator of visitor attractions globally with more than 130 attractions in 25 countries. It said it had already rejected several approaches.

The move comes just weeks after activist shareholder ValueAct Capital, which holds a 9.3% stake in Merlin, called on the company to find a private buyer.

The sale means that Merlin's shares will be delisted from the London Stock Exchange, which it floated on six years ago

Kirkbi Chief Executive Søren Thorup Sørensen said the group wanted to help the firm reach its "full potential, which we believe is best pursued under private ownership".

He added “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, for their next phase of growth.”

Merlin Chairman Sir John Sunderland stated “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.”

He said its board unanimously recommended the deal to the company's shareholders, advising “the company has generated meaningful value since its IPO (Initial Public Offering), with significant growth in revenue, earnings and cash flow.

"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."

Merlin has faced some high-profile struggles, including a crash in 2015 at one of its Alton Towers rollercoaster which injured 16 people. Visitor numbers to its attractions were also hit by the terror attacks in London and poor weather which led to a profits warning in 2017.

Images: Merlin Entertainments.

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