Legoland Owner Lines Up His Next Ride With SeaWorld PursuitBy , , and
Merlin CEO Nick Varney said to seek part of American business
Theme park operator earning more than 70% of profit abroad
Merlin Entertainments Plc’s Chief Executive Officer Nick Varney has provided no shortage of thrills and chills to shareholders in tourist attractions like Legoland and the London Eye.
Now he’s keen to make a major foray in to the U.S. by bidding for part of the money-losing owner of SeaWorld aquatic theme parks. A deal with SeaWorld Entertainment Inc. would cement his strategy of earning most revenue abroad as visits to London, home to Merlin-owned attractions like the Madame Tussauds waxwork museum, drop following terrorist attacks.
“They have made a series of excellent acquisitions under Nick,” said Tim Barrett, a London-based analyst at Numis Securities. “That’s what he built his reputation on, and their ability to slot in good assets into their portfolio remains very high.”
The speculation is that Merlin wants to buy SeaWorld’s Busch Gardens parks in Florida and Virginia, which include thrill rides, live entertainment and animal encounters -- but not whales and dolphins, which go against Merlin’s policy of not keeping cetaceans in captivity.
Along with opening new attractions in China and India, expanding in the U.S. will help Merlin build on the more than 70 percent of profit it already earns outside the U.K. While a deal for Busch Gardens risks swelling Merlin’s debt to more than three times Ebitda, a level at which investors get nervous, so far they aren’t worried. Merlin’s shares climbed 3.4 percent in London on Thursday, the most in two months.
Merlin may also end up being the wizard SeaWorld needs to help turn around its struggling business, freeing up cash to invest in its core aquatics parks. The Orlando-based company has had a hard time winning back customers since the 2013 documentary Blackfish detailed claims of mistreatment of orca whales and other animals.
Its shares, which have lost a quarter of their value its market value this year and traded at a record low just last week, rallied 4.6 percent on Wednesday when news of the potential deal first emerged. Representatives for Merlin and SeaWorld declined to comment.
SeaWorld is also trying to earn more money abroad. In March, private-equity group Blackstone Group sold its 21 percent stake in the company to Chinese leisure firm Zhonghong Zhuoye Group, paving the way for its first marine park in China.
Varney, who created Merlin through a management buyout in 1999, oversaw the acquisition of Legoland by Blackstone in 2005 after Danish toy company Lego A/S posted record losses. Merlin also operates a network of aquariums under its Sea Life brand.
Among his latest expansion plans is a Legoland park near New York, which still needs some approvals and is facing criticism from environmental groups seeking to stop it from going ahead.