Merlin Entertainment IPO Options ‘Open’ Amid London PreferenceSarah Shannon
Merlin Entertainments Group Ltd., the private-equity backed owner of Madame Tussauds and the London Eye, said London is the preferred location for a planned initial public offering, though all options are open.
“We would make no secret of our preference to list in the U.K.,” Chief Executive Officer Nick Varney said in an interview today as the Poole, England-based company reported higher annual profit on sales that exceeded 1 billion pounds ($1.5 billion).
Merlin has said it plans to seek a listing by 2014, having abandoned a proposed sale to the public three years ago in favor of selling a stake to CVC Capital Partners Ltd. According to a report in the Times newspaper last month, the company was put off listing in London at the time by a reluctance among U.K. institutional investors to buy shares in private-equity backed companies at anything other than a big discount.
A listing in the U.S. “is an option” as 20 percent of Merlin’s business is in North America, Varney said today. “We have to look at all the options available.”
The entertainment group plans to reduce its net debt from 1.27 billion pounds to less than three times earnings before interest, taxation, depreciation and amortization ahead of a listing, though hasn’t yet appointed advisers, Varney said.
In addition to CVC, Merlin is co-owned by Blackstone Group LP, the world’s biggest buyout firm, and Kirkbi A/S, the Danish owner of a majority stake in LEGO Group.
Merlin said today that operating profit rose 17 percent to 258 million pounds in the year ended Dec. 29, driven by growth in indoor attractions. Ebitda rose to 346 million pounds.
Revenue gained 15 percent to 1.07 billion pounds, though like-for-like sales declined 0.5 percent as some potential visitors attended the London Olympics instead. Wet weather across Europe also deterred families from visiting its parks.
Merlin is opening more entertainment parks across North America and Asia to drive growth as European economy wanes under the eurozone crisis. About 20 percent of revenue comes from North America and almost 15 percent from Asia-Pacific.
“We are not expecting to see much improvement in southern Europe, but we are feeling pretty confident about the rest of Europe,” Varney said today. Merlin owns the Gardaland theme park in Italy, where the impact of the Eurozone crisis is unlikely to improve anytime soon, he said.
Still, the company is “feeling fairly optimistic,” the CEO said, citing higher demand over the February school holidays amid an improvement in weather conditions.