Dubai International Capital has sold Tussauds Group, the company known worldwide for its Madame Tussauds wax museum and London Eye tourist attractions in London, to Merlin Entertainments, which owns Legoland and other entertainment properties. The price: £1.03 billion (approximately Rs8,885.81 crore). DIC will retain a 20 per cent stake in the combined entity.

Merlin, majority-owned by private equity capital group Blackstone and partly owned by LEGO Holding/KIRKBI groups, operates 38 attractions worldwide. Its brands include Legoland, Sea Life, Gardaland and Earth Explorer.

Tussauds Group consists of London city centre attractions (six Madame Tussauds - London, New York, Amsterdam, Las Vegas, Shanghai and Hong Kong; the British Airways London Eye, and Warwick Castle); and theme parks (Alton Towers; Thorpe Park; Chessington World of Adventures in the UK and Heide Park in Germany).

Exciting combination
Merlin and Tussauds together attracted 30 million visitors to their 50 attractions and four hotels in 2006. Merlin says the Tussauds acquisition would make it the world's second-largest visitor attraction operator after Disney. The two firms operate in 12 countries and employ more than 13,000 people.

Says Merlin's chief executive Nick Varney: "The combination of the Merlin and Tussauds brands, people, and operating expertise will create an exciting and world-beating global entertainment company." He adds: "With such iconic brands, the expanded Merlin will not only have strong development potential, but also an amazingly robust and high value portfolio. Our ambition is to build on this to become the world leader in location-based, branded, family entertainment."

According to Varney, "The deal is a major strategic move for Merlin which has already seen the most successful and dynamic growth in the sector over the last five years. It not only expands our business both geographically and demographically, but also underlines our objective to build a balanced portfolio. The combined group also has the resources and expertise to focus on accelerating current expansion plans for all the brands, particularly in North America."

The deal will give a boost to Tussauds Group's growth plans, including, according to its chief executive Peter Phillipson, the London Eye and the theme parks, and the launching of Madame Tussauds in other cities in the world.

Says Phillipson, "Under DIC's ownership, we have continued to make significant progress against our strategic objectives. We have acquired the British Airways London Eye, continued the international rollout of Madame Tussauds, and the construction of hotels at Chessington and Heide Park is progressing well."

He adds: "Joining forces with Merlin represents a very exciting opportunity to develop these brands as part of the world's second largest visitor attractions business. The combined group will be in an excellent position to continue the development of The London Eye and our theme parks, as well as accelerate the rollout of Madame Tussauds around the world. I am very much looking forward to working closely with Nick Varney to build a great business for our staff, customers and shareholders."

Expanded management
Varney will be CEO of an expanded management team of the enlarged group, and Phillipson will become non-executive chairman. Merlin's Andrew Carr will head finance, and Tussauds' Chief financial officer Rob Roger will head the integration process.

Merlin is majority owned by Blackstone, which purchased the company for £102 million in May 2005. Since then it has helped the management complete the acquisitions of the LEGOLAND chain of theme parks (August 2005) and Italy's biggest theme park, Gardaland (October 2006).

The major shareholder of the combined company will be Blackstone, with DIC, LEGO Holding/KIRKBI and management team retaining significant minority investments. Debt financing has been committed by Goldman Sachs, HVB and Lehman Brothers. The combined group will be refinanced following the close of the transaction. The transaction is subject to regulatory approval. Blackstone was advised by Goldman Sachs, Merlin by Lehman Brothers and UBS, and DIC and Tussauds by Citigroup.