Madame Tussauds owner Merlin to join London stock market


* Merlin will sell at least 20 percent stake, some in newshares

* New shares intended to raise 200 mln pounds to reduce debt

* Terra Firma-backed Infinis also announces float plans

By Kylie MacLellan and Neil Maidment

LONDON, Oct 21 (Reuters) - Merlin Entertainments, whoseattractions include the Madame Tussauds waxworks and Legolandtheme parks, plans to sell at least 20 percent of its shares ina stock market debut in London next month.

Stronger equity markets have helped to support a pick-up innew London listings after several years of drought.

Moreover, strong public demand for shares in Britain's RoyalMail this month has led to predictions that morecompanies will look to tap small investors as part of Londonfloats.

Chief Executive Nick Varney said he expected 10 to 15percent of Merlin's offering to go to retail, with buyers havingto invest at least 1,000 pounds. In return, they will get a 30percent discount on an annual pass to Merlin sites for eithertwo adults or a family.

The renewable energy generator Infinis Energy, owned by theprivate equity fund Terra Firma, also announced plans on Mondayto list at least 30 percent of its shares in London in November,and include retail investors in the sale.

Merlin, which operates 99 attractions in 22 countries, saidon Monday that an undisclosed proportion of the floated equitywould be new shares intended to raise 200 million pounds ($324million) to reduce debt.

Its owners, the Danish investment firm Kirkbi A/S thatcontrols Lego Group and the private equity firms BlackstoneGroup and CVC, as well as company directors andemployees, will also sell some of their holdings, the companysaid, although Kirkbi intends to remain a significant long-termshareholder.

Merlin put off plans for a listing in 2010 due to jitterymarkets, with shareholders instead selling a 28 percent stake toCVC. That sale valued the company, whose sites attracted morethan 54 million visitors in 2012, at 2.25 billion pounds.


"Notwithstanding the recent American debt crisis thatdelayed things a little bit, the markets are very much morehealthy, initial public offerings are being well received andinvestors have an appetite for investment in good assets,"Varney told reporters after the announcement.

Another Blackstone-backed theme park operator, SeaWorldEntertainments, floated in New York in April, and sawits shares close up 24 percent on their debut.

Merlin, the world's second largest visitor attractionoperator behind Walt Disney, posted underlying earningsbefore interest, tax, depreciation and amortisation of 346million pounds in 2012. On Monday it said revenue in the 35weeks to Aug. 31 was up 11.1 percent, supported by stronglike-for-like growth and the impact of new attractions.

Varney said the company plans to grow in both the U.S. andChina next year, including a Madame Tussauds in San Franciscoand Beijing. It is also in the process of developing a Legolandpark in Dubai and potential sites in Japan and South Korea.

Investec analyst James Hollins said Merlin's diversity madeit difficult to value:

"They are nicely diverse in terms of geography and incomestream. I think one of the tricky things will be where to placeit in the market ... It is a relatively unique business."

Varney said potential investors would be likely to compareMerlin to U.S. theme park peers as well as UK leisure companiesand consumer brands.

Disney is valued at a forward EV/EBITDA multiple of 9.6times, while British hotel and coffee shop operator Whitbread is valued at 10.8 times and InterContinental HotelsGroup at 11.5 times, according to Thomson Reuters data.

If Merlin's core earnings continue to grow at the annual14.3 percent they have averaged over the last five years, theywill reach nearly 400 million pounds in the 2013 financial year.

Chief Financial Officer Andrew Carr said Merlin had 1.2billion pounds of net bank debt in June. With the money raisedfrom the float, this would fall to around 1 billion pounds.

This would value the company's equity at 3 billion pounds,based on a notional 10-times EV/EBITDA multiple.

Goldman Sachs and Barclays are running the offering, and arejoint bookrunners along with Citi and Morgan Stanley.

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