It looks like the City were getting excited this week about the potential benefits of breaking up the Merlin Group to boost shareholder value. Not sure how this would impact AT, if at all? Interesting to see that the theme parks in 2017 have been the areas that have profited the Group.
Merlin urged to cast spell over City by splitting up (The Times, 10.11.17)
Investors in Merlin Entertainments are used to a rollercoaster ride on the markets. The FTSE 100 company behind theme parks that include Thorpe Park fell 16 per cent in a single day last month. Shares picked up yesterday, however, as the City discussed breaking up the operator.
Analysts at Numis contrasted the performance of the company’s Legoland and Resort Theme Parks divisions, which include Chessington World of Adventures and Alton Towers as well as Thorpe Park, with that of its Midway Attractions operation, which boasts Madam Tussauds and the London Eye. The latter had held Merlin back with lower growth, the broker noted, arguing that splitting the two sides of the company “may be the best way to unlock value”. Merlin has blamed poorer trading on bad weather and heightened concern over terrorism.
Numis upgraded the stock from “add” to “buy,” lifting shares by 2½p to 378½p. “Our perception is that investors have yet to be totally convinced of the value of the overall Merlin group structure and perceive a varying level of attractiveness in terms of growth potential and earnings visibility from the three divisions,” Numis said.
It added that the company’s recent trading update “conflated two distinct and very different issues,” with worse trading than expected this summer and clear disparity between different divisions.
Shares in Merlin, which floated in November 2013, are down almost 16 per cent since the turn of the year. The family of Kjeld Kirk Kristiansen, the former chief executive of the Lego Group, is its largest shareholder, with a 29.7 per cent stake. Relatives of Mr Kristiansen also own 75 per cent of Lego.
