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Dan
TS Contributor
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- Steel Vengeance
This really could be a positive or negative move. It really depends who the majority shareholders will be as they will determine if the park goes for long or short term profit.
When they do decide to float we will see a lot more information released about the company, most likely profit numbers for each park which would be interesting to know.
When they do decide to float we will see a lot more information released about the company, most likely profit numbers for each park which would be interesting to know.
BigAl
TS Member
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- Forbidden Journey
Screamscape have news about how well Merlin's been doing which will probably help with all of this:
An article from the Telegraph:
An article from the Telegraph:
Merlin’s record profits pave way for £3.5bn IPO
Merlin Entertainments, which owns the London Eye and Madame Tussauds, is paving the way for a £3.5bn market flotation as it gets ready to announce record profits of £350m.
Merlin’s rapid expansion has made it the second-biggest theme park operator in the world with more than 50m visitors a year across almost 100 attractions, including Legoland.
The company, which will present its annual results to almost 20 fund managers and City analysts on Wednesday, will say it has shifted its focus from the UK and Europe to Asia and the US.
For the first time, Merlin will announce almost 50pc of its business comes from outside Europe, with park openings in Japan, Thailand and China. Blackstone now shares ownership of the business with CVC and Kirkbi, the family investment firm that controls Lego Group.
Sales at Merlin are expected to have jumped more than 10pc to over £1bn, with operating profits up around 12pc to £260m and earnings before interest tax depreciation and amortisation (Ebitda) up to £350m.
Merlin’s rapid expansion has made it the second-biggest theme park operator in the world with more than 50m visitors a year across almost 100 attractions.
Merlin is one of the biggest IPO prospects of the next 12 months with the company currently deciding whether to float in London or New York. Insiders suggest the only step left is to contact the listing authorities in the chosen city and finalise banking advisers.
Merlin’s chief executive, Nick Varney, has always insisted his natural preference would be to have the company remain based in the UK with a London listing – even in the face of investor resistance.
“There was a lot of bad blood between investors and private equity and we have been trying hard to tackle that criticism. We are trying to get people familiar with Merlin so that when we press the button we do it the right way,” Mr Varney said.
The recent spate of successful London IPOs, such as Esure, Crest Nicholson, and Countrywide, have increased the chances of a UK float for Merlin and encouraged investors about the prospects of a private equity deal. Sellers have also become more confident about valuations after seeing companies’ share prices rise since listing, with Crest Nicholson’s lifting 24pc.
According to research from Dealogic, IPO volumes across Europe have climbed to $4.9bn so far this year, up 64pc on the same period last year.
“It is incredibly encouraging to see what’s been happening,” said Mr Varney. “Because the market has been closed for a long time, which is not good for companies or the London market.”
The change in sentiment has encouraged a wave of companies to gear up for potential stock market debuts, including HellermanTyton, the industrial cable company; and Partnership Assurance, the specialist insurer.
Other non-private equity floats such as Royal Mail and Santander UK, as well as the smaller Hastings Insurance are also keeping the market busy.
In 2010, Merlin was one of a group of buy-out backed companies forced to scrap its IPO because of the economic climate. Instead, Blackstone, which owns the majority stake, sold a 28pc stake to CVC for about £330m, valuing the group at £2.25bn.
The double-digit growth achieved oversees, Merlin is expected to win over institutional supporters at a time when the UK economy has very limited growth.
Last year, despite taking a hit from bad UK weather and the Olympics, Merlin’s Asian acquisition trail helped lift both earnings and top-line growth. “No one else is quite doing what we are doing: the direction of travel is pretty clear,” said Mr Varney.
They naturally will.
Merlin are extremely sensible - opening up in Asia where you have real growth plans and where the profit margins will lay. UK is pretty stagnant and europe is suffering with it's economicness. It all bubbles down to one continent balancing the books.
I'm certainly tempted to put at least a bit into merlins.
Merlin are extremely sensible - opening up in Asia where you have real growth plans and where the profit margins will lay. UK is pretty stagnant and europe is suffering with it's economicness. It all bubbles down to one continent balancing the books.
I'm certainly tempted to put at least a bit into merlins.
Tom
TS Member
This 'shift away from Europe' is hardly news. They can't expand further in Britain and there are limited opportunities in Europe. So to acheive the continued growth they need to demonstrate to investors in order to float, they have to launch a series of Madame Tussauds, Sea Lifes and Legolands across the rest of the world...
I want the float to be over and done with now. Things will get quite bad when it happens - particulalry if it happens on the US market - but it's obviously coming.
I want the float to be over and done with now. Things will get quite bad when it happens - particulalry if it happens on the US market - but it's obviously coming.
What I imagine, in regards to what's been happening, is that they've lumped all their certain style investments into one. UK more or less operates under "Merlin Attractions Operations Ltd" now - therefore not needing to show the individual parks profit and loss accounts, and taking off most of the pressure for a park if it's not succeeding as well as it should.
In theory, if towers has an incredibly bad year, but thorpe has an exceptional year.. it'll balance out the books without needing huge cost cuttings at towers to make things look acceptable to investors. So we shouldn't see what we ended up seeing with late tussauds (under DIC). Only time will tell though.
In theory, if towers has an incredibly bad year, but thorpe has an exceptional year.. it'll balance out the books without needing huge cost cuttings at towers to make things look acceptable to investors. So we shouldn't see what we ended up seeing with late tussauds (under DIC). Only time will tell though.
Oh trust me, if any park under performs, it will pay the price even though that performance could be hidden away in consolidated figures.
The changes to Merlins structure have been done simplify reporting and consolidate costs as the company expands into new regions and markets. Merlin will still be tracking how each park performs against every pound and penny invested in it, and if the return isn't as expected there will be consequences.
The increased focus on America and Asia makes sense, Merlin currently are a little too euro-centric and with recent economic woes, the area isn't looking as favourable as it was when Merlin set out on its expansion plans. They're only following trends already seen in other industries, such as the energy industry where the european giants are looking towards asia and south america for new revenue streams.
The changes to Merlins structure have been done simplify reporting and consolidate costs as the company expands into new regions and markets. Merlin will still be tracking how each park performs against every pound and penny invested in it, and if the return isn't as expected there will be consequences.
The increased focus on America and Asia makes sense, Merlin currently are a little too euro-centric and with recent economic woes, the area isn't looking as favourable as it was when Merlin set out on its expansion plans. They're only following trends already seen in other industries, such as the energy industry where the european giants are looking towards asia and south america for new revenue streams.
AdImagineer
TS Member
Johno said:
Totally agree with the second post, although I think it all depends on the level of abstraction or how people assess the merlin attraction portfolio i.e. when looking at it's stock market potential it's much easier to summarise the territories by geography and performance rather than focussing on individual attractions.
The market are nearly always interested in this aggregate approach, where a range of diverse and quite intricate assets can be summarised in a more manageable and financially measurable way. It allows them to see the broad sources of growth, rather than narrowing down on say one individual park within the UK which has performed well in 2012 etc.
Yet on the other side of the spectrum, I'm positive if you were sitting with the UK management it will be the polar opposite. The other territories and attractions will be discussed almost as distant competitors, used for benchmarking purpose or purely as an example of best practise.
As your righty put it, there is no such thing as taking pressure off the park... if the park is underperforming, it's underperforming. It's just depends whose applying the pressure, at the moment, it's not the market.
To clear this up - this is for accounting methods. Shareholders will not see the performances of individual parks, they'll see the performance of "merlin attractions operations ltd".
Of course, if one park is underperforming they may have to do something about it in regards to cutting budgets, but it'll be nowhere near as severe as if they were operating under individual entities, as they won't have shareholders to answer to if the overall section is performing well.
Of course, if one park is underperforming they may have to do something about it in regards to cutting budgets, but it'll be nowhere near as severe as if they were operating under individual entities, as they won't have shareholders to answer to if the overall section is performing well.
Johno
TS Member
thefatone said:
You're still not quite accurate.
Merlin Ltd will cut budgets and/or squeeze as much any park they think could be performing better.
If Alton is underperforming by £1 million, just because Thorpe is over performing by 1.5 million and thus the balance sheet says +0.5 million; doesn't mean there won't be any shareholder push.
You seem to suggest that shareholders will be happy with 0.5 million rather than 1.5 etc. Merlin will push the parks to perform well individually. Not publishing individual figures for each park means Merlin retain some discretion in competition sensitive information.