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Legoland owner Merlin is said to approach SeaWorld over deal

[NEW YORK] UK theme-park operator Merlin Entertainments Plc has approached SeaWorld Entertainment Inc asout a potential deal, according to people familiar with the matter.

Merlin, which runs the Thorpe Park Resort in southern England and Legoland parks across the world, has made a bid for part of the company, which could be a hurdle to a deal as SeaWorld prefers an outright sale, the people said.

SeaWorld, which has been working with advisers to explore options including a sale, also has received interest from other possible suitors, the people said, asking not to be identified as the details aren't public.

Shares of Orlando, Florida-based SeaWorld rose 4.6 per cent in late trading in New York.

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The company, which is currently valued at about US$1.3 billion, counts Chinese leisure firm Zhonghong Group as the biggest shareholder, with a 21 per cent stake acquired in March from Blackstone Group LP.

Representatives for Merlin and SeaWorld declined to comment.

Merlin has a policy of not keeping cetaceans such as whales and dolphins in captivity, which would signal that its interest lies in SeaWorld's Busch Gardens theme-park assets.

Chief Financial Officer Anne-Francoise Nesmes said on Merlin's earnings call on Aug 4 that the Busch Gardens parks are "good-quality assets and that we would be interested. But it takes two parties to do a deal."

SeaWorld could raise as much as US$1 billion from selling regional parks like Busch Gardens, getting funding to invest in its core aquatic-themed locations, Suntrust analyst Michael Swartz said in August. Busch Gardens has locations in Tampa, Florida, and Williamsburg, Virginia.

SHARE DROP

More than two years into an attempted turnaround of the company, SeaWorld Chief Executive Officer Joel Manby has struggled to stem declines in revenue or the stock price. Shares of the theme park operator have fallen 25 per cent this year, amid shrinking attendance and missed earnings forecasts.

The park owner famous for its killer whales came under fire in the 2013 documentary "Blackfish," which accused the company of mistreating the animals. Under Manby, SeaWorld stopped breeding orcas, created a new show in its San Diego park with animals performing more natural behaviours, and invested in non-animal attractions, such as roller coasters and ocean-themed rides.

Blackstone, the world's largest buyout firm, took SeaWorld public in 2013 after acquiring it four years earlier for US$2.3 billion.

Blackstone sold its final block of shares this year, cementing a return of about 2.7 times its original investment. Blackstone also owned Merlin in the past. The private equity firm acquired the entertainment company in 2005, bolstered it with acquisitions, sold a stake to CVC Capital Partners in 2010 and exited its final position in 2015.

Merlin, which also operates the London Eye and Madame Tussauds waxworks, has a market value of 4.6 billion pounds (S$8.3 billion). The company said in August it expects to meet profit estimates as expansion outside of the UK offsets a slide in the number of day-trippers visiting the British capital after terrorist attacks in London and Manchester.

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