The Orlando Sentinel is reporting that British-based Merlin Entertainments Group is readying an IPO that could raise as much as $3 billion by taking its stock public.
Industry experts say Blackstone [the private equity firm that owns Merlin] could either make the IPO more attractive by buying Busch Entertainment and packaging it with Merlin or use the money raised through a public offering to help finance a purchase of Busch. Analysts have estimated that a Busch sale could fetch anywhere from $2 billion to $4.5 billion.
If InBev was willing to sell Busch Gardens / SeaWorld for $2 billion, it would have been gone already. It is clear that they have been holding off in hopes of getting a premium offer for the properties, most likely somewhere in the $4 billion range.
While a $3 billion IPO would almost cover that, is it practical to think that a company would then turn around and take its entire net worth and more to purchase Busch Entertainment? That is a recipe for financial disaster even with Blackstone eating some of the costs. Could it happen? Of course it could. Take a look at today’s economy and you’ll see the wreckage of many such companies who did just that.
There is a stumbling block to Merlin that none of the news accounts have raised so far — their partnership with Universal (they own half of Universal Studios Orlando.) Because Merlin would be seeking to purchase property in Orlando within the same market as Universal’s park, they would first need to receive approval from Universal before they could proceed under the partnership agreement that they have.
And let’s not forget this strategic quote that emerged after Disney’s purchase of Marvel Entertainment just over a week ago.
“Disney executives say they have the financial room to make more acquisitions.”
Just what other major acquisitions could be out there that Disney would be interested in if this was not one of them?
When it comes to business deals, I wouldn’t bet against the House of the Mouse. Just compare the two companies –
Merlin — Legoland theme parks, Madame Tussauds wax museums and the London Eye
Disney — Disney World, Disneyland, various foreign parks, the ABC television network, Pixar, etc.
If Disney wants the Busch parks — and there is little doubt on this — do you really think that they’d lose out to the proprietors of Madame Tussauds wax museums? As Ferris Bueller said, “If I’m gonna get busted, it is not gonna be by a guy like that.”