Dubai International Capital (DIC), a division of the Dubai Government-owned group Dubai Holding, has sold its remaining interest in the entertainment company that owns the Madame Tussauds waxworks museums. DIC sold its 6 per cent stake in Merlin Entertainments, Europe's largest theme park and attractions operator, to CVC Capital Partners, CVC said in a statement.
CVC, a global private equity and investment company, also acquired part of a stake in Merlin previously held by Blackstone Group, one of the world's largest private equity companies. The amount of money paid to DIC for its stake was not revealed, but CVC said in its statement that the transaction valued Merlin at £2.25 billion (Dh12.36bn). "We at CVC are now pleased to be part of the ownership structure and look forward to working with management and supporting Merlin in this next phase of international growth," said Rob Lucas, a managing partner at CVC.
Talk of a sale of DIC's interest had circulated since the Financial Times reported earlier this week that CVC was nearing a deal with DIC and Blackstone to buy part of the company. The new ownership structure gives CVC a 28 per cent stake and leaves Blackstone with a reduced but still significant 34 per cent stake. The remainder of the company is controlled by KIRKBI, the investment arm of the Danish family that owns the LEGO Group.
DIC, Dubai Holding's private equity and investment arm, acquired Madame Tussauds in March 2005 for £800 million. The waxworks museum operator was merged in 2007 with Merlin Entertainments, a transaction in which DIC received more than £1bn in cash and retained an interest in Merlin of about 17 per cent, according to DIC's website. That stake was reduced in February to about 6 per cent through a sale to KIRKBI.
A DIC spokesman declined to comment on yesterday's announcement. The sale comes as DIC undergoes a strategic review and addresses large debts coming due this year. Last month it said it had extended the maturity of a $1.25bn (Dh 4.59bn) loan by three months. The loan was originally set to mature tomorrow. DIC is also contending with financial problems at Almatis, a German aluminium company that DIC bought in 2007. Last month it filed for bankruptcy in the US.
A source close to DIC said there were no immediate plans to offload any of the other companies in its portfolio, which includes Travelodge, the UK hotel chain, Doncasters, a UK manufacturer, and Alliance Medical, a UK diagnostic imaging services company. While DIC's sale of its Merlin stake is thought to be part of an effort to raise money and reposition itself amid changed economic circumstances, Blackstone said it was paring down its holding to realise returns on its investment.
Private equity companies typically try to exit their investments after three to five years, although stakes are often held longer than planned if economic circumstances are not favourable for a sale. "Merlin has delivered great returns for Blackstone investors," said Joseph Baratta, a senior managing director at Blackstone. "We are very proud of our involvement with the company and the substantial investment it has made in local communities around the world.
"This deal with CVC will allow us to realise part of our investment, while remaining a committed part of the ownership team of a business which we believe will continue to deliver great growth," he said. firstname.lastname@example.org