More signs point to a corporate takeover at SeaWorld, but the buyer still remains a mystery

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PHOTO BY ABI SKIPP VIA FLICKR
  • Photo by Abi Skipp via Flickr
Back in August, Merlin signaled interest in buying the two Busch Gardens theme parks from SeaWorld Parks and Entertainment, but SeaWorld CEO Joel Manby quickly squashed the idea.

Now Bloomberg is reporting that instead of backing away from Busch Gardens Merlin has approached SeaWorld about a potential deal. Rumors have pointed to SeaWorld recently delaying major new investments at both Busch Gardens Tampa and Orlando’s Aquatica. This may be in response to these buyout discussions.

The deal would involve a number of steps since SeaWorld has stated that it’s not interested in selling off bits and pieces. That is likely an attempt to sell the entire company but Merlin has vowed to not have cetaceans in captivity so buying the SeaWorld branded marine life parks would go against a primary value of Merlin. With the largest collection of dolphins and whales in captivity, it would be difficult to have Merlin offload the cetaceans to other marine life groups, and the sea pens that many have advocated would be difficult for various reasons, including fears of immune systems from the most captive raised whales plus the sheer cost of such an unprecedented move. Merlin does have one attraction in mainland China with cetaceans but is actively working to move these mammals to other facilities.

In the article announcing the rumored interest from Merlin, Bloomberg also stated that SeaWorld has “interest from other suitors.” Motley Fool, a business investment news site, laid out an interesting case to why one of the suitors might be the Disney company, while other obvious purchasers might be Universal’s parent company Comcast, Six Flags, or, according to Motley Fool, even Discovery Communications, parent company of Animal Planet, TLC, and Discovery Channel.

But at the front of the pack is still Merlin, the parent company of the Orlando Eye, Madame Tussauds, and Sea Life Aquariums. Sesame Place goes after the exact same demographics as Merlin’s Legoland brand, which Merlin is currently working to expand in the U.S. with a third location. Busch Gardens is very similar to thrill based parks Merlin currently operates in the U.K., but the SeaWorld would be a bit different for the attraction company. The Sea Life branded aquariums have proven popular for Merlin but SeaWorld, with its large marine animals and all-day focus would a new challenge.

One possible way to address this would be a group bid with another buyer. SeaWorld’s largest shareholder is now China-based Zhonghong Group, with its 21 percent acquisition in March of this year from Blackstone. Zhonghong is familiar and comfortable with the SeaWorld brand as it has announced plans for SeaWorld branded parks in mainland China.

Zhonghong may seem like the most ideal business partner for Merlin but there’s a major political speedbump to that pairing. Starting this summer China has begun cracking down on Chinese based companies investing outside of the country. This led to a failed buyout of New York-based senior living company Brookdale by Zhonghong. One possible option to help Zhonghong increase its international holdings might use a joint deal with Merlin to create a non-China based entertainment division of Zhonghong or a new company altogether that’s owned by Zhonghong.

Such a move by Zhonghong wouldn’t be unprecedented. Wanda, another Chinese company that was formerly rumored to be very interested in the SeaWorld brand, sold off its theme park and hotel division while reshuffling the company to allow more freedom with its Hong Kong-based division. The Chinese crackdown does mean that investment from mainland China has slowed to a trickle, which greatly limits the number of possible buyers for SeaWorld, which is valued currently at around $1.3 billion.

We can look at SeaWorld’s other dealings to find a potential partner for Merlin. In Abu Dhabi, the first international SeaWorld branded park is currently in the works. Abu Dhabi based developer Miral has licensed the SeaWorld name and is working with SeaWorld to design and develop the park. While Miral has been floated as another potential purchaser of SeaWorld the company currently has no developments outside of Abu Dhabi and is unlikely to have its first major international investment be such a struggling brand.

With Merlin unlikely to move away from its heavily publicized no cetaceans stance and SeaWorld unlikely to sell off its most valuable assets the most likely scenario is a joint bid with Merlin and partner, then after the purchase, the SeaWorld parks will go to the non-Merlin partner.

The deal with Merlin and whoever they may bring in will likely take place sooner than later as Merlin tries to work past disappointing news coming out of many of its U.K. attractions due to the recent terrorist attacks there and a horrific accident at one of its signature parks.

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