The Blackstone Group: Merlin Entertainment

Topics: Merlin Entertainments, Kohlberg Kravis Roberts, Madame Tussauds Pages: 4 (1248 words) Published: November 12, 2010
“The Blackstone Group: Merlin Entertainment”

The Blackstone group, founded in New York, is one of the largest private equity firms in the world with offices in USA, UK, Germany, France and India. The Blackstone model of investment operation is to invest out of a singel global equity fund so all its investments around the world tap into the same capital pools. One of the most attractive industries to invest for the Blackstone is theme parks and there are a number of reasons for that. The first is that such type of service business generates significant cash flow, second, there is a potential growth for attendance in Europe and additionally there is a weak competition for Blackstone among the investment firms doing roll-ups in Europe. The European fragmented theme park industry was the candidate #1 for consolidation and growth.

Blackstone’s first purchase in the theme park segment industry in Europe was Merlin Entertainment group, which operated 28 atractions in 8 European countries with 6 million visitors annually. Merlin was purchased for €149 million (US$187 million), €39 million(US$49) of which was equity. With this purchase Blackstone set a base for future follow-on acquisition opportunities in the entertainment theme parks industry. The same year Blackstone with Merlin was able to bid LegoLand deal and purchased it for €375 million (US$475milion), Lego maintained 30% stake in the combined company. Blackstone and Merlin management was able to recognized the opportunities to increase prices, improve martketing and ultimately improve profitability significantly at the LegoLand properties. Next year Blackstone purchased Gardaland, a theme park and hotel complex in Italy for €470 million (US$628 million). Once again Blackstone and Merlin management was able to improve profitability and lower the capital expenditures (EBITBA growth 9%, capital expenditures decreased by 7%). The next potential purchase of Blackstone was the Tussauds group, a well...
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