By Geoffrey Smith
Investing.com -- Another day, another victory for activist U.S. investors in Europe.
Merlin Entertainments (LON:MERL), the U.K.-based theme park operator famous for its Legoland parks and various London tourist attractions, has agreed to sell itself to a consortium including Blackstone Group (NYSE:BX) and the owners of Danish toymaker Lego for some 4.77 billion pounds ($6.06 billion), or 5.9 billion pounds including debt.
That’s a smart turnaround for the ValueAct hedge fund, which built a 9.3% stake earlier in the year and pressured Merlin to find a private buyer, saying that the shares were worth 30% more than the market thought. As it is, the purchase price is 36.8% above where it was just over a month ago, the day before ValueAct made its splash.
The move comes a day after Elliott Management triggered a sharp rally in German chemicals group Bayer (DE:BAYGN) by taking a $1.1 billion stake in it.
Merlin’s shares have languished over the last 18 months, as it has plowed almost all of its cash into expansion, notably through the construction of Peppa Pig theme parks in the U.S. and, latterly, China. Weak consumer sentiment in the U.K. and a high-profile accident at one of its theme parks haven't helped either.
Merlin was by far the top performer in London after early trading Friday, rising 14% to a 21-month high while the FTSE 100 index rose 0.2%. Other indexes were broadly higher after a raft of price data from across the euro zone gave no clear picture of a rise in inflation, strengthening the case for stimulus from the European Central Bank.
The benchmark Stoxx 600 index was up 0.75 points, or 0.2% to 382.96, although it was still on course to end the week 0.5% lower. Switzerland’s SMI stood out as the lone loser on the day, after the EU decided to restrict EU-based investors' access to the Swiss exchange in a broader dispute over access to each other's markets.
Elsewhere, Adidas (DE:ADSGN) shares haven’t been dismayed by a rare earnings miss from rival Nike (NYSE:NKE), which the U.S. company reported after the bell on Thursday. Adidas shares were up 2.3%.
And Traton (DE:8TRA), Volkswagen’s truck unit, made an underwhelming start to life as a public company. Its shares slipped over 1% after VW priced the IPO at 27 euros a share. As previously noted, the proceeds of the sale are less important to VW than the need to give its various units more independence and freedom to respond to the differing challenges that they face. Having initially eyed selling a stake of as much as 25%, the German group ended up scaling the placement down to a mere 11.5%.
(Correction: the original version of this article incorrectly stated that a 2015 crash at one of Merlin's parks had involved fatalities.)