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Alton Towers for Sale?

They ultimately took on a bit more than they could chew and expanded way too much. A massive mistake.

Also a few of the huge investments they made into brand new Legoland parks have flopped massively. 3 of them are meant to be complete ghost towns 95% of the time so must be losing so much money per year.

Its a long way back for them now.
 
Benjsh said:
They ultimately took on a bit more than they could chew and expanded way too much. A massive mistake.

Also a few of the huge investments they made into brand new Legoland parks have flopped massively. 3 of them are meant to be complete ghost towns 95% of the time so must be losing so much money per year.

Its a long way back for them now.
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How so? The 3 under construction parks are meant to open in 2025*, 2027 and 2028 respectively.

Shanghai opened in July this year.

Legoland Sichuan was supposed to open in 2023 and was pushed back to 2025 and to be fair still has no announced date yet.
 
Maelstrom said:
The three that are not busy as expected are Korea, New York and Dubai. However they didn’t pay to build Dubai and are just paid to operator it, so Dubai isn’t a financial strain on the company.
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Looking at the locations for New York and Korea, it's no real surprise that they might not be a massive draw. Not middle of nowhere places but don't particularly look that great either.
 
With Dubai, I also get the impression that none of the parks in that area are particularly busy, so it’s not especially unusual that Legoland isn’t overly busy.
 
These vloggers are allowed to have their opinion on what Merlin have done wrong (and right) in their ownership of Towers, and speculate on what the future means, but they’re no more qualified or knowledgable about the matter than your average theme park enthusiast and therefore you can save yourself a lot of time by not watching these videos.

They may be ‘experts’ or rollercoasters, but being an expert on corporate financing and the like they are not.
 
I wonder what the value of somewhere like Towers would be? Also do we know how much Merlin sold the actual land for all the way back when, was that public information?
 
Blackrock said:
I wonder what the value of somewhere like Towers would be? Also do we know how much Merlin sold the actual land for all the way back when, was that public information?
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They sold the land for Alton Towers, Thorpe Park, Madame Tussaud’s London and Warwick Castle for £622 million back in 2007. The value of each park’s land was not released, just the total of them all.

www.blackstone.com

Merlin and Prestbury - Sale and Lease Back Transaction - Blackstone

Press releases, portfolio company news, and timely updates on our business.
www.blackstone.com www.blackstone.com
 
Mick said:
They may be ‘experts’ or rollercoasters, but being an expert on corporate financing and the like they are not.
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And therein lies the problem. A lot of people will take what they say at face value and assume they know what they are talking about. A lot of Shaun’s content will receive lots of comments ain’t the lines of “you should run Towers, Shaun, you’d do a great job of it!”

In reality, chances are he would do a far worse job than Merlin are. As enthusiasts, we wouldn’t be able to run a park because what we want would bankrupt us.
 
AT86 said:
It basically meant they could fund the purchase of the Tussaud’s Group without having to use debt.
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Which I guess made sense at the time but considering they’ve now got a lot of debt albeit serviceable for the time being maybe perhaps it was slightly shortsighted.

But would they have been able to grow at the rate they have if they hadn’t done that.
 
Blackrock said:
Which I guess made sense at the time but considering they’ve now got a lot of debt albeit serviceable for the time being maybe perhaps it was slightly shortsighted.

But would they have been able to grow at the rate they have if they hadn’t done that.
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The vast majority of the debt that they're in now is a result of the second leveraged buyout, taking it back into private ownership in 2019, from being publicly floated.

The original intention was to float the company, to give the original investors an exit and return on their initial investments.

The Smiler crash, the UK terror incidents and shocking 2017 weather were responsible for an absolute tanking in Merlin's share price and it never truly recovered. Additionally, the founding partners of Merlin Private 2.0 believed that the company required significant, long-term investment that was better managed away from the short-term scrutiny of the public stock market.

Such investments often take years to generate returns, which can be challenging to manage when beholden to the quarterly reporting demands of public shareholders. They didn't expect to be beholden to bloggers during closed season, however.
 
I’m of the opinion that if Merlin does sell any theme parks it’s likely to be all the Legolands to the Lego Group. And seeing as Kirkbi own 75% of the Lego Group and 47.5% of Merlin it’s almost like a transfer of assets between the same people.

I’d potentially expect to then see Kirkbi divest of their Merlin holdings.

But who knows.
 
havaska said:
I’m of the opinion that if Merlin does sell any theme parks it’s likely to be all the Legolands to the Lego Group. And seeing as Kirkbi own 75% of the Lego Group and 47.5% of Merlin it’s almost like a transfer of assets between the same people.

I’d potentially expect to then see Kirkbi divest of their Merlin holdings.

But who knows.
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If Merlin sold the Legoland parks, that would put the Resort Theme Parks in a really awkward position. Arguably they have a lot more in common than either parts do with the Midways. From an outsider’s POV, it looks like Merlin are going big on ride contracts and then achieving some economy of scale across the Merlin estate. Not to mention the operational knowledge they would share being part of the same operator.

Merlin no longer treats its different assets as different divisions, so I can’t see any of them getting spun off as a whole. It’s just treated a one entire chain now, which suggests they want to merge and streamline a lot of the business functions as much as possible and remove any duplication they had before.
 
AT86 said:
They sold the land for Alton Towers, Thorpe Park, Madame Tussaud’s London and Warwick Castle for £622 million back in 2007. The value of each park’s land was not released, just the total of them all.
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AT86 said:
It basically meant they could fund the purchase of the Tussaud’s Group without having to use debt.
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Is that essentially a form of asset-stripping?

I realise that selling the land will help generate cash in the short-term (in order to buy other parks overseas, as well as funding the initial purchase itself), but you could argue that it ends up hurting Alton Towers in the long-term, due to having to pay rent for the next 50+ years*.

I’m also not sure why Tussauds agreed to sell to Merlin in the first place, when they surely could have just sold the land themselves?

(*I remember Duncan Bannatyne saying that a major advantage of his care homes was that he owned the land, whereas many of his competitors sold the land and paid rent instead – which caused problems later on)
 
Secret Weapon said:
I realise that selling the land will help generate cash in the short-term (in order to buy other parks overseas, as well as funding the initial purchase itself), but you could argue that it ends up hurting Alton Towers in the long-term, due to having to pay rent for the next 50+ years*.
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I don't think the land sale had anything to do with the other parks overseas. It was to fund the purchase of Tussauds.
 
Secret Weapon said:
Is that essentially a form of asset-stripping?

I realise that selling the land will help generate cash in the short-term (in order to buy other parks overseas, as well as funding the initial purchase itself), but you could argue that it ends up hurting Alton Towers in the long-term, due to having to pay rent for the next 50+ years*.

I’m also not sure why Tussauds agreed to sell to Merlin in the first place, when they surely could have just sold the land themselves?

(*I remember Duncan Bannatyne saying that a major advantage of his care homes was that he owned the land, whereas many of his competitors sold the land and paid rent instead – which caused problems later on)
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The purchase of Tussaud's, as well as the later privatisation, was a leveraged buyout.

A leveraged buyout is where the acquirer raises finance to purchase its acquisition against the assets belonging to the target company.

DIC, the owners of The Tussauds Group, received £1.03 billion in cash and retained a 20% stake in Merlin Entertainments. A better deal than selling the land alone.

In July of 2007, Merlin entered into a sale and leaseback agreement in relation to certain assets, including Madame Tussaud London, Thorpe Park, Alton Towers and Warwick Castle, for £622 million. Merlin’s rationale was to use the proceeds from this transaction to fund its 3 year development programme, which had a €400 million budget, and additionally part of the proceeds went to repay the debt incurred to fund the purchase of The Tussauds Group.
 
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