CVC buys into £2.25bn Merlin

Blackstone retains a ‘significant stake’ in the entertainment group, which owns iconic brands like the London Eye, while DIC has exited completely.

CVC Capital Partners has acquired a 28 percent stake in Merlin Entertainments Group in a deal that values the company, which operates a number of UK-based visitor attractions such as the London Eye, Madame Tussauds and Warwick Castle, at £2.25 billion (€2.72 billion; $3.36 billion).

As a result of the deal, The Blackstone Group will reduce its holding in the company – but retain a “significant stake” – and Dubai International Capital (DIC) will exit the business completely as part of its “strategy of moving out of non-core holdings”, a statement from Merlin said Thursday.

KIRKBI, the privately-held, family-owned investment and holding company that controls the LEGO Group, has kept its shareholding unchanged.

The investment will “underpin Merlin’s ambitious growth plans,” the statement said.

Merlin had been one of the high profile candidates for the mooted IPO window earlier this year, as frothy equity markets encouraged financial sponsors to ready portfolio companies for exit.

“Having thoroughly reviewed all the options for the next phase of ownership of Merlin, we believe this transaction represents the best way forward,” said Nick Varney, chief executive of Merlin. “Merlin has prospered under private-equity ownership and we believe that we will continue to do so,” he added.

Blackstone purchased Merlin Entertainments from Hermes Private Equity in May 2005. The firm completed the acquisition on behalf of its Blackstone Capital Partners IV fund, which closed on $6.45 billion in 2002.

The firm was able to merge Merlin and Legoland shortly afterwards when it bought a controlling position in the latter from Lego group and KIRKBI for €375 million on behalf of the same fund.

In related news, CVC Asia-Pacifc, the affiliate of CVC Capital Partners in Europe, has dropped out of a $1.5 billion joint bid with Kohlberg Kravis Roberts for Melbourne-based hospital operator Healthscope. KKR continues to maintain a strong interest in Healthscope and is now bidding alone, a spokesman for the firm said.