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Merlin Entertainments Group (“Merlin”), Europe’s leading and the world’s second largest visitor attraction operator, has made a recommended takeover offer (“Offer”) via its subsidiary Merlin Entertainments (Australia) Pty Limited (“Merlin Australia”) for Living and Leisure Australia Group (“LLA”), the owner and operator of nine leading visitor attractions in the Asia Pacific region, as well as a management contract in Dubai.
- The Offer to acquire LLA, if accepted by LLA Securityholders, would accelerate the development of Merlin’s Asia Pacific operations and builds on its international expansion strategy, based on the rollout of its iconic global attraction brands ;
- The Offer of 5.14 cents cash per LLA stapled security (“LLA Security”) values LLA at approximately A$140 million (108 million Euros) on an equity value basis, and implies an enterprise value for LLA of approximately A$244 million (188 million Euros) ;
- LLA Directors unanimously recommend the Offer, in the absence of a superior proposal, and subject to an Independent Expert opining that the Offer is fair and reasonable.
Merlin announces that Merlin Australia, has executed an Implementation Deed with LLA pursuant to which Merlin Australia will make a recommended off-market4 takeover offer for all the stapled securities in LLA at 5.14 cents cash per LLA Security.
The Offer implies an enterprise value for LLA of approximately A$244 million3, which represents a multiple of 7.2x operating FY11 EBITDA of A$34.0 million5. The price offered per LLA Security represents a 157% premium to the closing price of LLA Securities on 20 October 2011, the day prior to LLA’s announcement that it was conducting a review of strategic initiatives aimed at reducing the discount between the listed price of LLA Securities and fair value. The LLA Board has stated that no superior proposal has emerged as at the date of this announcement. The LLA Directors unanimously recommend the Offer, in the absence of a superior proposal, and subject to the Independent Expert opining that the Offer is fair and reasonable. Each LLA Director who has an interest in LLA Securities has stated that they intend to accept the Offer in respect of LLA Securities which they own or control, in the absence of a superior proposal, and subject to the Independent Expert opining that the Offer is fair and reasonable.
In addition, Merlin Australia has entered into a pre-bid agreement with LLA’s largest securityholder, Arctic LES (Ireland) Limited, to acquire a stake giving Merlin a relevant interest in 19.99% of the LLA Securities on issue.
Merlin Australia has also agreed to acquire Living and Leisure Australia Management Limited (“LLAM”), the responsible entity of Living and Leisure Australia Trust, from Arctic Capital Limited if Merlin Australia obtains effective control of LLA, for a purchase price based on the net tangible assets of LLAM.
The Offer to acquire LLA, should it complete, offers an excellent opportunity for Merlin to significantly increase its network of world class international attractions in Asia and Australia, successfully building on the acquisition of the Sydney Attractions Group earlier this year.
Merlin’s current attractions in the Asia Pacific region include: in Australia and New Zealand, Sydney Aquarium, WILD LIFE Sydney, Sydney Tower Eye and SKYWALK at the Sydney Tower Eye, WILD LIFE Hamilton Island, Oceanworld Manly, and Kelly Tarlton’s Antarctic Encounter and Underwater World in Auckland; and Madame Tussauds attractions in Hong Kong, Shanghai and Bangkok. Attractions under development in the region – both of which are planned to open in 2012 – are a major LEGOLAND theme park in Malaysia and a Madame Tussauds in Sydney. LLA owns and operates nine leisure attractions in the Asia Pacific region as well as a management contract in Dubai, through three divisions: Oceanis Groupaquariums; Australia Alpine Enterprises ski fields; and Australian Treetop Adventures attractions. The addition of LLA’s attractions will mean that, post completion, Merlin will have almost 90 world class attractions across North America, Western Europe, Asia and Australasia.
Nick Varney, Chief Executive Officer of Merlin, said:
“This is a unique opportunity for Merlin to acquire not just a group of high quality attractions which complement our existing portfolio of iconic global attraction brands, but which also increases our interests and exposure to Asia and Australia. Completion of this deal, together with our existing ongoing development, would represent an important step in our growth strategy for the region which we believe is full of opportunities and prospects for those with the right attractions and expertise.
Merlin also has a strong track record of growing the assets it buys. The acquisition of LLA would open up new markets to us and facilitate the continuing roll out of the SEA LIFE, Madame Tussauds, Eye and LEGOLAND brands in the Asia Pacific region, complementing our existing strength in Western Europe and North America. ”
Summary of the Offer
Merlin Australia’s proposal offers LLA Securityholders the opportunity to realise cash proceeds for their LLA Securities at a material premium to historic trading levels in a low-liquidity security for which no dividends have been paid in the last four years.
The Offer consideration of 5.14 cents cash per LLA Security represents a premium of:
- 157% to the closing price of 2.00 cents per LLA Security on 20 October 2011, the last closing price before the LLA Directors announced a review of strategic initiatives aimed at reducing the discount between the listed price of LLA Securities and fair value ;
- 154% to the volume weighted average price of 2.02 cents per LLA Security in the three months leading up to and including 20 October 2011 ; and
- 68% to the Net Tangible Asset value of 3.07 cents per LLA Security as at 30 June 2011 based on 2,726.3 million LLA Securities on issue.
Conditions of the Offer
The Offer is subject to a limited number of conditions, including a 90% minimum acceptance condition, approval of the Foreign Investment Review Board, obtaining certain third party consents and other customary conditions.
Further information
Merlin Australia expects to lodge its Bidder’s Statement containing the terms of the Offer and other material information relevant for LLA Securityholders’ consideration of the Offer with ASIC and ASX shortly and for this to be despatched to LLA Securityholders as soon as practicable. The Target’s Statement by LLA will contain further information for LLA Securityholders, including the reasons why the LLA Directors are unanimously recommending that LLA Securityholders accept the Offer in the absence of a superior proposal and subject to the Independent Expert report opining that the Offer is fair and reasonable.
Advisers to the transaction
Merlin has engaged J.P. Morgan as its exclusive financial adviser and Mallesons Stephen Jaques as its legal adviser in relation to the proposed transaction.
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NewsParcs will do a full coverage of the IAAPA Attractions Expo 2013 in Orlando to have a look at the latest trends and developments of the global theme park industry.
In addition, Merlin Australia has entered into a pre-bid agreement with LLA’s largest securityholder, Arctic LES (Ireland) Limited, to acquire a stake giving Merlin a relevant interest in 19.99% of the LLA Securities on issue.
