Major New Force In European Leisure As Blackstone Acquires Legoland

New York/London : The Blackstone Group today announced the acquisition of LEGOLAND Parks by affiliate company Blackstone Capital Partners IV, for €375m. The deal includes LEGOLAND’s four family theme parks in England, Germany, California and Denmark -where the company also has a 176 room hotel.

This follows Blackstone’s acquisition last month of Merlin. The intention is to combine the two businesses. With 12 million visitors the new Merlin Entertainments Group will be both the second largest visitor attraction business in Europe with Europe’s 2nd and 3rd largest attraction brands – Sea Life and LEGOLAND – and the 9th largest operator in the world. Blackstone and management will take a 70% share in the new Merlin Entertainments Group, while the LEGO Group will hold 30%. The new Group will be led by Nick Varney, CEO of Merlin Entertainments and CFO Andrew Carr.

LEGOLAND and Merlin – with its Sea Life, Dungeons, and Earth Explorer brands – are a natural fit – not least culturally. Both have developed:

Together they offer significant product, marketing and promotional synergies and create a balanced portfolio naturally hedged against external factors such as weather, international visitor trends, and localised market economics.

Unusually for theme parks, LEGOLAND, based around the popular LEGO construction toys, has a strong appeal for families with younger children offering potential to develop the sites into destination resorts with hotels and other group attractions. The LEGOLAND California site also provides a natural platform to explore growth for the overall company in the USA and other global markets.

Merlin is one of Europe’s leading operators of branded visitor attractions and one of the most consistently successful, with an EBITDA which has risen by over 100% in the last 5 years (£14.5m in 2004). The company has a proven track record developing quality brands across borders retaining strong core elements and values, while being flexible enough to reflect local cultures. Merlin is already market leader in leisure attractions in the massive German market, and the addition of the LEGOLAND Park near Munich to the company portfolio will further underline this position.

Commenting, Joseph Baratta, a Senior Managing Director of The Blackstone Group, said: “We are delighted that we have been able very quickly to execute our strategy of building a leading theme park and attractions business in Europe. We believe that Merlin, led by Nick Varney and his excellent team, is an ideal platform from which to build a terrific business of scale in this sector. The combination of LEGOLAND and Merlin creates a unique asset in the leisure industry. We are particularly pleased to have as a significant partner in this business a world class company such as the LEGO Group. The LEGO Group’s continued involvement with the business will be helpful in realizing our growth objectives, and displays the LEGO Group’s strong conviction about the prospects for the combined company.”

“We plan to continue growing the Merlin business through investing in its existing stable of brands: Sea Life Centres, Dungeons, Earth Explorer and now, importantly, LEGOLAND. We will also consider selective acquisitions that are consistent with our strategy of building a world class family-oriented leisure business.”

LEGO Group owner, Mr Kjeld Kirk Kristiansen, commenting on the new partnership, said: “The toy market has been declining for some time and is extremely competitive. To consolidate its position, the LEGO Group chose to sell its majority holding in the LEGOLAND Parks in order to focus on closer relations with our customers and consumers, improved marketing, and a greater emphasis on core products. It was however extremely important for us that the new ownership was based on the true LEGO values of playful learning and creative experiences of a high quality, and in Merlin Entertainments we have found a very professional partner with whom we can really release the potential of the LEGOLAND Parks. We have no doubt that together we will create a very strong player within the worldwide family attractions sector.”

Nick Varney, Chief Executive of the new combined Merlin Entertainments company commented, “LEGOLAND has a very strong brand and operating franchise, with excellent staff at all levels. The new company will provide the investment and expertise the parks need – in both product and marketing – to take them to the next level. It also offers tremendous opportunities to leverage market advantage with joint promotional and development activities in the future. I have no doubt that this will be a very exciting time for everyone involved – we have the opportunity to create something very special – a European leisure company which really understands brands and customer service – and which knows how to exploit them profitably worldwide.”

Editor’s Notes

About The Blackstone Group

The Blackstone Group, a private investment and advisory firm with offices in New York, Atlanta, Boston, Los Angeles, London, Hamburg, Paris and Mumbai, was founded in 1985. The firm has raised a total of approximately $34 billion for alternative asset investing since its formation. Over $14 billion of that has been for private equity investing, including Blackstone Capital Partners IV, one of the largest institutional private equity funds ever raised at $6.45 billion. Other investments in the leisure sector have included Universal Studios in Orlando, and Six Flags Theme Park. In addition to Private Equity Investing, The Blackstone Group’s core businesses are Private Real Estate Investing, Corporate Debt Investing, Marketable Alternative Asset Management, Corporate Advisory, and Restructuring and Reorganization Advisory

About Merlin Entertainments

Merlin operates 28 attractions across 8 European countries under the Sea Life, Dungeon and Earth Explorer brands. It is pursuing a dynamic opening programme across all its brands with 3 new Sea Life Centres planned in the next 12 months; a new Dungeon in Amsterdam for October 2005; and a new Earth Explorer site to open in 2007. 2004 was one of Merlin’s most successful years to date – contrary to many others in the sector – with visitor numbers up by over a million versus 2003 to 6.3 million; revenue up by 26% to £44.9million; and EBITDA up to £14.5 million – a 37% increase on 2003 (£10.6m).

About LEGO Group

The LEGO Group is a privately held, family-owned company, based in Billund, Denmark. It was founded in 1932 and today the group is the world’s fourth largest toy manufacturer with 2004 sales of DKK 6,704m and employing approximately 7,400 people globally. The LEGO Group is committed to the development of children’s creative and imaginative abilities. LEGO products can be purchased in more than 130 countries. At the beginning of the 21st century the LEGO brick was acclaimed as “Toy of the Century” – first by Fortune Magazine and later by the British Association of Toy Retailers.

LEGOLAND Parks are Europe’s No 3 branded visitor attractions with visitor numbers of over 5.6 m in 2004