Last week brought the announcement that Merlin Entertainments — which owns the likes of Madame Tussauds, The London Dungeons, The London Eye , LEGOLAND Parks, Alton Towers, Thorpe Park and Chessington World of Adventures — is set to launch an initial public offering, and now the company has announced its expected price range.
With the Global Offer price range set between 280p and 330p per share — the same range that Royal Mail (LSE: RMG) was set at, perhaps controversially in hindsight — management values the entertainment group between £2.86bn and £3.34bn.
The primary offering constitutes around £200 million for around 20% – 30% of its shares, to be used to reduce net debt and to pay costs associated with the IPO. Nick Varney, Chief Executive Officer of Merlin, commented:
“We believe that Merlin Entertainments has bright prospects for the future and, as we said in our Intention to Float announcement, the listing will provide us with the platform for our next stage of development. We look forward to embarking on the next stage of the process.”
Market sentiment has improved in recent months, and certain IPOs are beginning to catch the eye of investors. Twitter is due to float on the New York Stock Exchange in the coming weeks, while rumours that Whitbread is planning to float its Costa Coffee chain and The Daily Mail & General Trust may do likewise with its Zoopla website are creating ever more noise in the City.
Then, of course, there’s Royal Mail, which is now up almost 64% since it floated at 330p (although that has caused the initial 6% yield to fall to around 4%), and has made for a popular topic of discussion among seasoned and novice investors alike. While Twitter is looking to avoid the problems that Facebook had upon launch by justifying and downplaying any ‘hype’ with a road show to big potential investors, Merlin Entertainments looks like it may be learning from Royal Mail by treading in its footsteps.
There’s no doubt it was a hugely successful IPO, for investors who bought in with £750 and have held their position, at least. The question is: can Merlin Entertainments fill those pretty sizeable shoes? Let us know what you think in the comments box below.
> Sam owns shares in Royal Mail, but no other company mentioned.