Merlin Entertainments plc announced on Friday that it has given its consent to be acquired by a consortium made up of Lego owner Kirkbi, alternative asset management and private equity firm Blackstone Group LP, and Canada Pension Plan Investment Board, in a pact that estimates Merlin to be worth about £4.77 billion (~$6.06 billion).
Merlin owns Madame Tussauds wax museums located in London and other key cities. Following the report of the acquisition, shares of Merlin Entertainment rose 13.09% or $1.31 to close at 11.35 on Friday.
According to the buyout terms, shareholders of Merlin will receive 455 pence in cash per Merline share, giving it an enterprise value of £5.905 billion or $7.50 billion. The acquisition price reflects a premium of 15.2% to Merlin’s final traded share price of 395 pence on Thursday, the trading day before the announcement.
Kirkbi, which already has a 29.6% stake in Merlin following the divestment of Legoland Parks to the UK enterprise in 2005, has a majority stake in Lego, the children’s toymaker in Denmark.
Soren Thorup Sorensen, chief executive of Kirkbi, explained how the acquisition would positively impact Merlin. “We believe that this group of investors has the unique collective resources necessary to equip Merlin… for their next phase of growth.”
The takeover is anticipated to be completed in 4Q2019. Once the acquisition is finalized, Kirkbi, the private investment company of Lego’s Kirk Kristiansen family) will have a 50% stake in Merlin, while the remaining 50% ownership will be with Blackstone and Canadian pension fund CPPIB.
Merlin, established in 1999 and listed on the LSE in 2013, owns 127 museums in 25 countries. Before the company was listed, Kirkbi and Blackstone private equity funds controlled Merlin together. The enterprise generated revenue of £1.70 billion pounds and received 67 million visitors last year. Merlin also owns the London Eye Ferris wheel as well as the firm that operates Legoland theme parks across the globe.
Chairman of Merlin, Sir John Sunderland explained the reason for recommending it to the company’s shareholders: “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 realize value for their investment in cash at an attractive valuation. We are therefore unanimously recommending it to our shareholders.”
The acquisition news is anticipated to keep the stock bullish in the short-term.
The historical price chart indicates that the stock is trading above its 50-day moving average. Additionally, the Chaikin Money Flow indicator is making new highs. As a result, we can anticipate the stock to move up in the short-term.
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