Slaughter and May and Clifford Chance (CC) are representing the City elite on a £4.8bn offer for Merlin Entertainments, in a deal that brought together a line-up of heavy hitters with Kirkland & Ellis and Latham & Watkins also fielding veteran partners.
The deal was announced on 28 June with Merlin, which is being advised by Slaughters, agreeing the terms of a recommended offer. The acquiring consortium comprises Kirkbi – the investment vehicle for Lego’s founding family – alongside private equity houses The Blackstone Group and the CPP Investment Board (CPPIB).
Slaughters has deployed senior partner Steve Cooke on the deal alongside corporate partner Rob Innes; competition partner Lisa Wright; employment and share schemes partner Phil Linnard; and tax partner Gareth Miles.
Kirkland is opposite Slaughters in advising Blackstone through London transactional partners David Higgins, David Holdsworth and Dipak Bhundia. Latham is acting for CPPIB, with private equity partner Mike Bond and public M&A partner Richard Butterwick at the helm. CC, meanwhile, advised Kirkbi with a corporate team led by partners Steven Fox and Tim Lewis alongside private equity partner Simon Tinkler. The deal has also seen Ashurst land a role, with corporate partners Tim Rennie and Karen Davies advising independent investment bank Lazard.
Kirkbi currently owns close to a third of Merlin and alongside Blackstone previously owned Merlin until 2013 when the leisure group was listed on the London Stock Exchange. According to Slaughters’ Innes, this makes the consortium’s membership unusual for such a deal.
‘The composition of the consortium is fairly rare,’ Innes told Legal Business. ‘You don’t often see a majority shareholder teaming up with two private equity houses.’
Merlin owns a number of popular attractions, including the London Eye; Alton Towers and Chessington World of Adventures, with the acquiring consortium assuring existing Merlin attractions in the UK will remain open, with no plans to sell parts of the business. Currently Merlin operates in 25 countries with over 130 attractions.
However, in recent years the leisure group has been involved in high-profile difficulties, including a crash in 2015 at one of its Alton Towers rollercoasters that left 16 people injured, a controversy some feel lowered the purchase price. The consortium is paying 455p per share, valuing the shares at more than £4.7bn, while the overall price of the transaction rises to almost £6bn including debt.
For the legal industry the deal is a boon, being one of the largest UK-targeted transactions of 2019 so far, while many are fearing a slowdown in transactional circles. But more important is the line-up of transatlantic legal talent, which suggests US players are appearing more frequently in European M&A circles, something Innes expects could continue:
‘We’re seeing them more than we did a couple of years ago,’ he added. ‘Public-to-private deals were a rare thing, but they’ve had a resurgence, which is good for firms like Kirkland.’