* Merlin will sell at least 20 percent stake, some in new
* New shares intended to raise 200 mln pounds to reduce debt
* Terra Firma-backed Infinis also announces float plans
By Kylie MacLellan and Neil Maidment
LONDON, Oct 21 Merlin Entertainments, whose
attractions include the Madame Tussauds waxworks and Legoland
theme parks, plans to sell at least 20 percent of its shares in
a stock market debut in London next month.
Stronger equity markets have helped to support a pick-up in
new London listings after several years of drought.
Moreover, strong public demand for shares in Britain's Royal
Mail this month has led to predictions that more
companies will look to tap small investors as part of London
Chief Executive Nick Varney said he expected 10 to 15
percent of Merlin's offering to go to retail, with buyers having
to invest at least 1,000 pounds. In return, they will get a 30
percent discount on an annual pass to Merlin sites for either
two adults or a family.
The renewable energy generator Infinis Energy, owned by the
private equity fund Terra Firma, also announced plans on Monday
to list at least 30 percent of its shares in London in November,
and include retail investors in the sale.
Merlin, which operates 99 attractions in 22 countries, said
on Monday that an undisclosed proportion of the floated equity
would be new shares intended to raise 200 million pounds ($324
million) to reduce debt.
Its owners, the Danish investment firm Kirkbi A/S that
controls Lego Group and the private equity firms Blackstone
Group and CVC, as well as company directors and
employees, will also sell some of their holdings, the company
said, although Kirkbi intends to remain a significant long-term
Merlin put off plans for a listing in 2010 due to jittery
markets, with shareholders instead selling a 28 percent stake to
CVC. That sale valued the company, whose sites attracted more
than 54 million visitors in 2012, at 2.25 billion pounds.
"Notwithstanding the recent American debt crisis that
delayed things a little bit, the markets are very much more
healthy, initial public offerings are being well received and
investors have an appetite for investment in good assets,"
Varney told reporters after the announcement.
Another Blackstone-backed theme park operator, SeaWorld
Entertainments, floated in New York in April, and saw
its shares close up 24 percent on their debut.
Merlin, the world's second largest visitor attraction
operator behind Walt Disney, posted underlying earnings
before interest, tax, depreciation and amortisation of 346
million pounds in 2012. On Monday it said revenue in the 35
weeks to Aug. 31 was up 11.1 percent, supported by strong
like-for-like growth and the impact of new attractions.
Varney said the company plans to grow in both the U.S. and
China next year, including a Madame Tussauds in San Francisco
and Beijing. It is also in the process of developing a Legoland
park in Dubai and potential sites in Japan and South Korea.
Investec analyst James Hollins said Merlin's diversity made
it difficult to value:
"They are nicely diverse in terms of geography and income
stream. I think one of the tricky things will be where to place
it in the market ... It is a relatively unique business."
Varney said potential investors would be likely to compare
Merlin to U.S. theme park peers as well as UK leisure companies
and consumer brands.
Disney is valued at a forward EV/EBITDA multiple of 9.6
times, while British hotel and coffee shop operator Whitbread
is valued at 10.8 times and InterContinental Hotels
Group at 11.5 times, according to Thomson Reuters data.
If Merlin's core earnings continue to grow at the annual
14.3 percent they have averaged over the last five years, they
will reach nearly 400 million pounds in the 2013 financial year.
Chief Financial Officer Andrew Carr said Merlin had 1.2
billion pounds of net bank debt in June. With the money raised
from the float, this would fall to around 1 billion pounds.
This would value the company's equity at 3 billion pounds,
based on a notional 10-times EV/EBITDA multiple.
Goldman Sachs and Barclays are running the offering, and are
joint bookrunners along with Citi and Morgan Stanley.