Merlin Entertainments agrees £4.8bn takeover offer

Merlin Entertainments, the operator of Legoland Parks, Alton Towers and Madame Tussauds, has agreed to a £4.8bn takeover offer from Bidco, a consortium backed by the founding family of the Lego Group.

Kirkbi AG, the investment vehicle of Lego’s founding Kirk Kristiansen family, and private equity giant Blackstone, together with the Canada Pension Plan Investment Board as a co-investor, offered 455p in cash per Merlin share.

Following the acquisition, Bidco intends that Merlin will continue to operate as a standalone business group. Bidco does not intend to make any material changes in location of Merlin's headquarters and headquarters functions and no changes are envisaged by Bidco with respect to the redeployment of Merlin's fixed asset base, or the research and development functions of Merlin.

Furthermore, the Consortium expects to keep open all existing Merlin attractions in the UK and is not intending to dispose of any material part of the Merlin business.

Since its formation in 1999 Merlin has successfully pursued a consistent strategy to
create a high growth, high return family entertainment company based on strong brands
and a global portfolio of assets that is naturally hedged against the impact of external factors.

This strategy has enabled Merlin to grow from a business with 19 attractions in 5 countries generating revenue of approximately £20m and approximately £7m of EBITDA in 1999 to one with 127 attractions in 25 countries generating revenue of £1.7bn and £494 million of underlying EBITDA in 2018.

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, CEO 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, said, '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.'