Alton Towers for Sale?

[Benjsh]

Tesco managed rapid expansion through renting.
They seem to be doing ok.

Apples and Oranges though isn't it? Supermarkets and the Leisure industry aren't really comparable markets.

For what it's worth though.... I don't think who owns the land is anything to do with Merlin's current struggles. They have decided on a very aggressive expansion program throughout the world at a very volatile time finically for families. We've gone through a pandemic plus the subsequent cost of living crisis which isn't just impacting the UK but other markets too including the US.

More conservative spending as a group and increasing their offering more at their most successful locations/resorts might have been a more sensible way to spend the money.

 

[Bert2theSpark]

What I’m hearing from employers at the moment as one of their biggest cost pressures is the increase in national insurance, whilst the national living wage is being made stronger. Yet revenue is not increasing because of cost of living pressures.

Before the outsourcing and redundancies, Towers had about 2k staff on payroll and we’ve seen a lot of those staff members removed off payroll. As seems they seem to continue to be for the foreseeable future. I think the comparison with the retail industry is fair because a similar proportion of costs (40-50% of revenue) goes towards staff wages.

There’s similar cost pressures at all of the other international theme park chains at the moment, so the lack of investment into Towers isn’t to do with a leaseback agreement they signed nearly 20 years ago…

 

[Secret Weapon]

Apples and Oranges though isn't it? Supermarkets and the Leisure industry aren't really comparable markets.

Tesco managed rapid expansion through renting.
They seem to be doing ok.

That's true, although Tesco is different from Alton Towers in that they can easily relocate to another location within the same city if the rent prices become unfavourable and/or a better location becomes available (Sainsbury's in Wolverhampton moved around 1 mile down the road for this reason, approximately 10 years ago).

 

[Blackrock]

What I’m hearing from employers at the moment as one of their biggest cost pressures is the increase in national insurance, whilst the national living wage is being made stronger. Yet revenue is not increasing because of cost of living pressures.

Before the outsourcing and redundancies, Towers had about 2k staff on payroll and we’ve seen a lot of those staff members removed off payroll. As seems they seem to continue to be for the foreseeable future. I think the comparison with the retail industry is fair because a similar proportion of costs (40-50% of revenue) goes towards staff wages.

There’s similar cost pressures at all of the other international theme park chains at the moment, so the lack of investment into Towers isn’t to do with a leaseback agreement they signed nearly 20 years ago…

And it’s about to go up again in April, it’s way too high and has risen far higher than it ever should have. The same as the personal tax free allowance which is why it’s been frozen for years and will continue to be frozen, they’re all leading to wage compression at the bottom whilst our out of date tax brackets are leading to wage compression from the top.

Running any hospitality, retail or leisure business atm is an absolute challenge.

 

[Bert2theSpark]

CdA recently had a press conference for their 2024/25 results and talked about their growth strategy for the future. A few French/European enthusiasts have noted the quote below, possibly referencing the situation with Merlin at the moment.

In the press conference about the 2024/2025 results, Dominique Thillaud from the CDA:
"We're still pursuing a bolt-on strategy (small acquisitions as opportunities arise, I should clarify). We're looking at a number of options – there are always some at the moment. Several companies that were listed and carried out leveraged buyouts (LBOs) before COVID are in less favorable shape today, so we're looking to see if there are assets that could become available.

However, he clarified that it's not an absolute priority for the group, which is primarily focused on organic growth, and that the CDA (presumably referring to a specific entity or entity) wants to carefully assess the risk of any acquisition. Before concluding: "That being said, I think there will be some deals in the coming months. We're looking at very specific things right now."

Considering how Merlin went private just before COVID occurred, it’s likely at least in-part they are indeed talking about Merlin. But what’s possibly most interesting to this thread is that CdA is considering leveraging their position to buy assets from companies in a similar position to Merlin, albeit it’s not their main growth strategy.

Honestly if CdA were exploring buying any assets from Merlin, I think Heide Park would be the top contender for purchase as it’s an under-leveraged asset from Merlin, in a market that they already understand and operate.

 

[Dave]

My only concern with a theoretical CdA buyout is they seem to want all their park properties to either be an Astrix park of a walibi branded park.

Really wouldn’t want Walibi Towers, other than that I think they have done really well with Park Astrix and have experience running a successful theme park in a market that competes with a giant like Disney.

 

[GooseOnTheLoose]

CdA recently had a press conference for their 2024/25 results and talked about their growth strategy for the future. A few French/European enthusiasts have noted the quote below, possibly referencing the situation with Merlin at the moment.


Considering how Merlin went private just before COVID occurred, it’s likely at least in-part they are indeed talking about Merlin. But what’s possibly most interesting to this thread is that CdA is considering leveraging their position to buy assets from companies in a similar position to Merlin, albeit it’s not their main growth strategy.

Honestly if CdA were exploring buying any assets from Merlin, I think Heide Park would be the top contender for purchase as it’s an under-leveraged asset from Merlin, in a market that they already understand and operate.

I think that the key phrase in that statement is "bolt-on strategy", along with the qualifier"(small acquisitions as opportunities arise, I should clarify).".

In corporate finance terms, a bolt-on acquisition is typically a smaller company that is added to a platform company to enhance its value, often within a specific region or sector. Buying a flagship Merlin RTP, or a chunk of the division, doesn't really fit the definition of a bolt-on. It would be a significant restructuring acquisition.

The description of companies that "were listed and carried out leveraged buyouts (LBOs) before COVID" does fit Merlin perfectly, but it also fits Parques Reunidos, who were taken private by EQT in 2019. Parques Reunidos has a portfolio of smaller, regional parks which fits the "bolt-on" description far more comfortably than a Merlin Resort Theme Park.

With Heide Park, there is also familiar fly in the ointment, which we're used to hearing when discussing the sale of Merlin parks...

The freehold for Heide Park was sold off in 2007, along with Alton Towers, Thorpe Park and Warwick Castle, to fund the original Tussauds acquisition. Whilst this, of course, doesn't prevent a sale, Compagnie des Alpes typically prefers to own the underlying assets of its parks. It allows for easier capitalisation on the balance sheet. Taking on a park where you are contractually obliged to pay millions in rent every year, with inflationary uplifts, before you even open the gates, doesn't typically fit their operating model.

 

[Benzin]

CdA buying parks will be of the ilk of Belantis rather than say, Heide Park.