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Robert Niles
Editor

Theme park news and notes: More InBev rumors

Published: January 17, 2009 at 12:55 AM

Thanks to Theme Park Insider reader James Rao for the tip.

A story in the Financial Times is stirring up more uncertainty about the fate of the Busch theme parks.

Bidders are lining up to participate in the sale of more than $7bn worth of assets that are being prepared to go under the auctioneer's hammer in the wake of InBev's $52bn takeover of Anheuser-Busch, the brewer of Budweiser.

Busch Entertainment, the group's theme park business, which owns SeaWorld Orlando, is expected to be one of the first business units put up for sale with a possible price of up to $4bn.

Potential bidders include Merlin Entertainments, the Blackstone-owned theme park group whose assets include Madame Tussauds and Legoland.

Possible strategic bidders include media group Walt Disney, the world's biggest operator of theme parks, and Universal Studios, which is majority-owned by the US television and film business, NBC Universal.

Six Flags, which owns 20 theme parks in the US, Mexico and Canada, is also expected to ask for the sales memorandum.

Before you freak out over the prospect of "Six Flags Williamsburg," let's break down the story and see what it really says.

First, there's no timeline for when the BEC parks will go to auction. The story says that InBev has until November before it must make a payment on the bridge loan it secured in anticipation of getting money from selling selected Busch assets, such as the theme parks.

Second, requesting a "sales memorandum" isn't the same thing as making a bid. Every competitor will request a sales memorandum. Why? Because they can contain loads of juicy information about a company that previously might have been known only to insiders, including sales, expense, profit and loss figures. You'd have to be an idiot not to request one when a competitor goes on the block, even if you have no intention of bidding for it.

Third, and here's the biggie: InBev "could also opt to spin off Busch Entertainment via a demerger if it does not achieve the price it is looking for through an outright sale" (between $2 billion - $4 billion).

What the heck is a "demerger"? In short, it means that BEC would be split from InBev, with InBev shareholders getting shares in BEC. With the $400-million Hard Rock Park failing to earn even a $35-million minimum bid in bankruptcy court, there's not much solid recent pricing information about theme parks to guide a bid for BEC. Perhaps the demerger could be the way this goes. The silver lining? Maybe the Busch family isn't out of the picture yet.

I'm off to Hawaii for a week. Look for lots of warm-weather pictures in Tuesday's "park visit" report, as well as the regular TPI updates, posted from the home state of our incoming U.S. President.

Replies (15)

James Rao
Writer

Published: January 17, 2009 at 1:29 AM

Thanks for the thorough explanation, Robert, but it was too late, I had already freaked out over the idea of SF Williamsburg! Ugh, nothing could be worse. Nothing.

Now, Disney's Williamsburg Kingdom.....I like the sound of that.

Universal Studios Tampa?

Ahhh....I am feeling much better already.

Have fun in Hawaii!

David Sutter

Published: January 17, 2009 at 7:37 AM

Have fun on your trip Robert!...My take is the demerger, First Busch has many, many things going on with saving sea life, and preservation, etc...And also i belive gets grants for much of there work. And to detangle the red tape might be more then a lotta Copanies may want to get involved with..So my votes going to the spin off...And all the properties remain "Busch Entertainment"...
Anthony Murphy
Writer

Published: January 17, 2009 at 10:23 AM

Nah, it will be all good for SWO and BG's. Didn't Universal Studios have this problem a few years back when moving to GE? I also do not think Six Flags will be able to afford those giant and pricy parks, but think about this: Six Flags and Disney, as far as I know, are the only other two that have had experience handling a "Zoo". I think Busch Theme Parks will more or less stay the same or go for top dollar. Though it is scary if Universal or Disney get it in FL. Talk about a monopoly!
Derek Potter

Published: January 17, 2009 at 10:38 AM

Hawaii...you dirty rat. It's minus 12 in Ohio.

James, I think you dream sir. I really don't see either Disney or Universal jumping in here. Disney probably won't like the weather in Williamsburg, and I'm sure they and Universal would rather BGT close than remain open. While that probably won't happen, it just doesn't make a whole lot of sense for either of them to buy the Tampa park, unless they buy it, strip it, and close it. I wouldn't worry too much about Six Flags. Banks aren't loaning much money these days, especially to a company with their debt and financial condition. I do look for them to do very well this year. Staycations are in right now, as evidenced by the almost 10% attendance increase at the Cedar Fair parks this year.

As for the bidding. I would guess that Inbev will hold out on selling either as long as they can until economic conditions improve. The failure of Hard Rock to sell for a bag of marbles is evidence that companies either are scared to death of the economy, or they can't get the money.

Here's something to think about though. The pending sale of the Busch parks could be the very reason that Hard Rock didn't sell. Some of those companies were reported to be in the mix for Hard Rock, but obviously the Busch Parks would be the bigger prize, especially if they could get the kind of discount that Hard Rock was selling for. Maybe these companies were holding back on their bids because they knew this was coming and they wanted all the leverage they could get for the InBev sale. I still think that these companies are foolish for not scooping up Hard Rock at 9 cents on the dollar, but it would be an explanation as to why they didn't. Not a good one mind you, but one nonetheless.

Robert Niles
Editor

Published: January 17, 2009 at 11:45 AM

Very interesting point, Derek!

Disney was rumored to be considering SWSD, as an extra place to send land/cruise guests for a day. Universal would like to have SWO to package with UO. But if you get one SW park, you have to take the others to protect your investment in the brand.

Merlin is the only rumored buyer with interest and potential capability of buying the chain whole.

James Rao
Writer

Published: January 17, 2009 at 1:20 PM

I don't know much about Merlin as I have never been to one of their parks. On the surface it looks like the company has the right stuff to take over Busch, but I just don't know. Are they clean freaks like the Busch folks are today? Will they keep the aesthetic beauty of the parks? Perhaps someone who has been to Legoland or to one of Merlin's overseas locations can comment on the company's "attention to detail" factor?

And Derek, it has been said that "when you wish upon a star, your dreams come true." I'll apply that strategy tonight if there are clear skies in Missouri!

Derek Potter

Published: January 17, 2009 at 1:59 PM

It has been said...

You can wish in one hand, and crap in the other...and see which one fills up first.

James Rao
Writer

Published: January 17, 2009 at 3:53 PM

So negative...is all that Cedar Fair pessimism finally taking its toll, Derek? ;)

As long as Six Flags doesn't get the parks, I'll probably be okay. SF running Busch would be like crapping in both hands.

Scottland Jacobson

Published: January 17, 2009 at 4:45 PM

I recently bought a 2 year platinum pass to the Busch parks that includes both Busch Gardens, all 3 Sea Worlds, Sesame Place and a few of their water parks like Aquatica. It will be interesting to see if the parks aren't bought as a whole package what will happen to passholders like me.
Joshua Counsil

Published: January 18, 2009 at 4:56 AM

Battle of the titans. People are afraid of Busch's future, but this excites me.

Still, I agree with James - SF Williamsburg would be crap in both hands.

Derek Potter

Published: January 18, 2009 at 11:38 AM

Pessimism? Cedar Fair had a great year. Business and attendance is up, parks (at least the ones in my state) look great. New B&M coaster coming to my home park this year. There isn't anything pessimistic about Cedar Fair at the moment.

My pessimism about these matters stems from observation of business in general and my view on the state of the business. It has too many businessmen and not enough entertainers. In this case, InBev has money on the brain and is foolish to sell a highly successful and profitable Busch Gardens/Sea World franchise...and I suspect that the franchise will be bought by someone too focused on the bottom line. Keeping a healthy balance sheet is always a good thing, but not at the expense of your product's quality, which is the reason why your balance sheet is healthy in the first place.

Larry Zimmerman

Published: January 18, 2009 at 12:34 PM

My biggest fear for Busch Entertainment is that someone will buy it and then run it into the ground. Under the A-B flag, there was always plenty of back-up capital to fund improvements and rehabs. Someone going it alone won't have that cushion to fall back on. InBev is being short sighted, in that BEC is making money, has an experienced management team in place, and has parks consistently rated by users -- US! -- as some of the best in the world. It'd be a shame to lose all that. If they'd keep the parks, I might even consider drinking Budweiser or Michelob products...once in a while, anyway...
James Rao
Writer

Published: January 18, 2009 at 3:02 PM

Great point, Larry. Will the new owner/owners have the capital to withstand some tough economic times? If it is Disney, Universal, Merlin, or possibly even Cedar Fair (if things are as rosy as Derek says....although even with attendance slightly up at Cedar Point - thanks to a longer than usual season and the short term phenomena of the "staycation" - per person in park spending has been down overall), then the Busch Parks should be fine. If Six Flags or some other financially strapped company takes the reigns, then what Larry forecasts will probably come to pass.

And Derek, I was simply responding to your jab with one of my own, not commenting on CF's financials. Besides (here comes the "wink-wink" part of this post) everyone knows there is no joy at a Cedar Fair park, just miles and miles of pessimistic concrete and ice cold steel. =P

Derek Potter

Published: January 18, 2009 at 7:33 PM

I'll tell ya...I have an absolutely horrible time at Cedar Point and Kings Island several times a year....just horrible. Haven't made it to Worlds of Fun yet to have a horrible time there :)

I wish Coors would buy Busch Gardens. Then I could have a free Blue Moon or Killians.

James Rao
Writer

Published: January 18, 2009 at 8:43 PM

I have a horrible time a Worlds of Fun several visits each summer. Trust me, Derek, you wouldn't want to waste your time riding one of the longest steel coasters in the world (Mamba), or one of the better B&M inverts (Patriot), or some cut-rate GCI woodie (The Prowler). Ugh! Just awful! =D

Maybe Carolus Nolet, Sr., owner of Ketel One, would care to invest in a theme park or two? Skip the beer, bring me my Ketel One and tonic, then I'll be ready for a few rides on the Griffon!

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