07 October 2009 by By Jason Kelly
Oct. 7 (Bloomberg) -- Blackstone Group LP, the world’s biggest buyout firm, agreed to buy Anheuser-Busch InBev NV’s amusement park business for as much as $2.7 billion in the largest private-equity deal this year.
Blackstone, based in New York, agreed to purchase the parks unit that includes SeaWorld and Busch Gardens, the companies said today in a joint statement. AB InBev will get $2.3 billion in cash and as much as $400 million in extra payments depending Blackstone’s return on the investment.
“There was a lot of doubt among investors 12 months ago as to whether they could sell these assets,” Andrew Holland, an analyst at Evolution Securities in London, said in an interview.
The purchase tops Silver Lake’s agreement last month to take a majority stake in EBay Inc.’s Skype unit for $2 billion and KKR & Co.’s $1.8 billion acquisition of Oriental Brewery Co. from AB InBev. A 63 percent rebound in global stock markets from their March low has allowed firms to sell more of their holdings and fueled a resurgence in deals after a two-year drought left the industry with $400 billion in unspent funds.
AB InBev, the world’s largest brewer, inherited the SeaWorld and Busch Gardens amusement parks as part of its $52 billion takeover of Anheuser-Busch last year. The company has since cut jobs, culled marketing budgets and sold assets to pay down debt.
Madame Tussauds
Blackstone co-owns the Universal Orlando park with NBC Universal, a unit of Fairfield, Connecticut-based General Electric Co. The New York-based private-equity firm also controls Merlin Entertainments Group Ltd., which operates attractions including the Madame Tussauds waxworks museum and the London Eye Ferris Wheel.
Blackstone will fund the acquisition with about $1 billion of equity, a $950 million term loan, $450 million in mezzanine loans and a $100 million revolver, according to three people familiar with the details.
Buying the AB InBev unit gives Blackstone SeaWorld parks that are based in San Diego, San Antonio and Orlando, Florida, according to their Web sites. Busch Gardens has parks featuring rollercoaster rides and other attractions in Tampa Bay, Florida, and Williamsburg, Virginia, according to their sites.
Beer Business
The sale of the parks will give AB InBev funds to continue repaying debt and later expand overseas in its main beer business. Chief Executive Officer Carlos Brito said in a September interview that there will be “much more” room for the company to expand internationally, including through acquisitions, once it has paid down more of its debt.
Rising unemployment and a slumping economy have hit U.S. theme parks as consumers scale back travel plans. Walt Disney Co., based in Burbank, California, cut jobs at its attractions this year and stepped up discounts. The owner of the Walt Disney World and Disneyland parks is offering extra days on vacation packages and free visits on birthdays.
Six Flags Inc., the owner of 20 theme parks, sought bankruptcy protection in June, 3 1/2 years after Washington Redskins owner Daniel Snyder became chairman and hired new managers in an attempt to return it to profitability. That group inherited $2.4 billion of debt that can’t be sustained, CEO Mark Shapiro said in a statement at the time. The New York-based company plans to reorganize under Chapter 11.
$400 Billion Pool
Blackstone, founded in 1985 by Stephen Schwarzman and Peter G. Peterson, manages the industry’s largest single buyout pool, a $21.7 billion fund it finished raising in 2007. Private-equity firms worldwide have about $400 billion in committed, unspent funds, according to Pitchbook Data Inc., a Seattle-based researcher.
Blackstone said the financing includes senior secured credit facilities and mezzanine debt. Bank of America Corp., Barclays Capital, Deutsche Bank AG, Goldman Sachs Group Inc. and Mizuho Corporate Bank Ltd. are providing the senior debt.
Goldman Sachs and GSO Capital Partners, a unit of Blackstone, are providing the mezzanine.
Bank of America, Barclays, Blackstone Advisory & Restructuring Partners, Deutsche Bank and Goldman Sachs advised Blackstone on the deal, while JPMorgan Chase & Co. and Lazard Ltd. were financial advisers to AB InBev.
Simpson Thacher & Bartlett LLP was legal counsel to Blackstone while Sullivan & Cromwell LLP worked with InBev.
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