Lego family click with partners to buy Legoland firm
● Leisure group Merlin Entertainments, best known for Legoland Resorts and Madame Tussauds wax museums, is to be acquired in a £6bn (about R108bn) deal by the Danish billionaire family that controls toymaker Lego, private equity group Blackstone and a Canadian pension fund.
The consortium said on Friday it would pay 455p in cash per Merlin share, a premium of 15% over its closing price of 395p on Thursday. At that level, the offer will value Merlin shares at more than £4.7bn. The company has net debt of about £1.2bn, giving it an enterprise value of close to £6bn.
The transaction will see Kirkbi, the investment vehicle of Lego’s founding family, which owns close to 30% of Merlin shares, team up with Blackstone and Canadian pension fund CPPIB. Among its holdings, Kirkbi owns a 75% stake in Lego.
The deal marks one of the largest European buyouts in recent history and comes at a time when private equity funds are flush with cash and looking at bigger targets.
It also comes a month after US activist hedge fund ValueAct said the market was undervaluing the business and that Merlin should seek a buyer to take it private.
In an open letter to the chair of Merlin, ValueAct said that “private ownership is simply better placed than current public shareholders to underwrite the investments Merlin must make”. The hedge fund owns just over 9% of Merlin’s stock.
Merlin’s roots date back to 1979 and its opening of an aquarium in Scotland. The group expanded across the UK and continental Europe before its management group led a buyout in 1999. It then changed hands in 2004 and 2005, first to private equity group Hermes and then to Blackstone and Kirkbi.
A serious accident on a roller-coaster at its Alton Towers attraction in 2015 and the London terror attacks in 2017 both caused sharp drops in its share price.
The consortium said on Friday its “unique group of investors is equipped with the appropriate long-term investment horizon, expertise and capital required to realise the company’s potential”.
Kirkbi CEO Soren Thorup Sorensen 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. 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.”