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LEGOLAND operator Merlin Entertainments poised for growth post US$6.1b acquisition

LEGOLAND operator Merlin Entertainments poised for growth post US$6.1b acquisition

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LEGOLAND operator Merlin Entertainments will be acquired for US$6.1 billion by a consortium of long-term investors comprising KIRKBI Invest, a wholly-owned subsidiary of LEGO brand owner KIRKBI A/S, Blackstone, and Canada Pension Plan Investment Board.According to a press release, the group of investors is equipped with the appropriate long-term investment horizon, expertise and willingness to increase capital investment that are required to “grow all branded experiences” across Merlin’s Midway Attractions, LEGOLAND Parks and Resort Theme Parks. The consortium explained that significant investment is required to ensure the longevity of the existing assets and to drive continued growth for the company and its stakeholders.The consortium clarified that it has no intentions to change the location of Merlin’s headquarters, and no changes are envisaged to the redeployment of Merlin’s operations and places of business across 25 countries. Under the agreement, there will be also be no material change to the employment of the employees and management, or to initiate any material headcount reductions within the current Merlin organisation beyond the existing management’s publicly announced efficiency programmes. Existing contractual and statutory employment rights, including in relation to pensions, of all Merlin management and employees will also be fully safeguarded.The offer will be made by a newly incorporated company which has been formed on behalf of the members of the Consortium, with each of KIRKBI and the Blackstone/CPPIB group owning 50%. Merlin’s shares will de-list from the London Stock Exchange upon completion of the transaction.KIRKBI A/S CEO Søren Thorup Sørensen said: “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.” He added that for the investors to ensure LEGOLAND and the other activities in Merlin to reach their full potential, the consortium believe that it is best pursued under private ownership.KIRKBI has maintained a significant strategic shareholding in Merlin since the sale of LEGOLAND Parks to the Company in 2005. KIRKBI and Blackstone private equity funds jointly controlled Merlin in the eight years prior to the 2013 public listing, during which time the company became the second largest visitors attraction business globally.“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,” said Joe Baratta, global head of private equity, Blackstone. Blackstone has longstanding experience investing in location-based entertainment businesses as well as the wider hospitality, travel and leisure sectors.Ryan Selwood, managing director, head of direct private equity at CPPIB, said Merlin’s ability to partner with a number of leading global brands to deliver high-quality family entertainment has been key to Merlin’s success. “Through close collaboration with our partners, we look forward to promoting the steady growth, long-term capitalisation and continued international expansion of this business, which aligns well with CPPIB’s long-horizon investment strategy,” he added.

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