Wednesday, October 7, 2009

Sea World, Busch Gardens Now in the Hands of Private Equity as Blackstone Group (BX) Swoops In

Fresh off the heels of a magnificent $3 million (ah memories of Tyco's Kozlowski anyone?) birthday bash in 2007....

Some 500 guests toasted Schwarzman on his 60th birthday, hailing him for reeling in the world's biggest buyout just four days earlier: the $39 billion deal involving commercial-building empire Equity Office Group. Those who came enjoyed a $1 million private concert by Rod Stewart, free-flowing wine and nonstop courses of gourmet feasting in a party said to top $3 million. of the country's top oligarchs, Steve Schwarzman, has bought Sea World and Busch Gardens so his children have their own personal theme parks. Ok, ok - I exaggerate... we're not at that point yet; that is a headline more for say 2030 per the current trendline we are on. While Schwarzman's company, Blackstone Group (BX) is buying the company, it is not just for his self pleasure. Indeed, we know the game plan from here [Private Equity's Game Plan Revealed! More at 11.]: chop a lot of costs (read - people), load the company up with debt to pay for acquisition fees and a multitude of management fees, and you should see the (much more profitable without all those nasty employee costs) theme park IPO circa 2011.

And who will be pumping the 2011 theme park IPO as an "awesome opportunity"? (aside from Jim Cramer) Probably many of the exact same names slathering themselves in fees for the takeover today; it's a whose who of our financial lords.
  • Blackstone will finance the acquisition via senior secured credit facilities and debt provided by Bank of America's Merrill Lynch, Barclays, Deutsche Bank, Goldman Sachs and Mizuho Corporate Bank Ltd.
Thankfully the peasantry still get to have their games (the theme parks!) to keep distracted.

As for the adults in the room.... You take this asset from me, I'll take this asset from you, the investment banks will charge the fees for moving assets from 1 to the other, we'll load the company with debt to pay for our management skills and pay for the transaction costs.... and then we'll unload it to someone else or the public in a few years. We all win here; all we need is more easy money from our Fed. Get to it Ben!

Via AP
  • Anheuser-Busch InBev said Wednesday it will sell its theme parks, including the three SeaWorlds and two Busch Gardens across the U.S., to private equity firm Blackstone Group for at least $2.3 billion.
  • It is considered the second-largest entertainment park operator in the U.S. after Walt Disney Co. and has about 25 million visitors a year and 25,000 employees.
  • Carlos Brito, the brewer's CEO, said in a statement that the business performs well but is not a core focus for Anheuser-Busch InBev.
  • It's not clear how much the business is worth. According to Anheuser-Busch InBev's annual report from 2008, the entertainment unit had pro-forma revenue of 932 million euros, or about $1.37 billion (it's really irrelevant in the big picture of the financiers - the fees are the thing, making purchases at sensible prices are just negligible details)
  • Busch Entertainment will maintain its headquarters in Orlando, Florida, and for now, the Busch name, Atchison said. (I kind of like Schwarzman Gardens myself)
It's nice to be on the side that always wins, even if its only with a few thousand shares. I can almost feel Ben Bernanke begging me to take his cheap money via osmosis of owning these BX stock certificates.

Long Blackstone Group in fund; no personal position

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