2nd Jul 2014 10:40
(An article published June 30 2014 08:21 misstated the name of the research company, the correct version follows.)
LONDON (Alliance News) - Merlin Entertainments PLC said Monday it will open its first LEGOLAND park in Japan in a project set to cost approximately GBP185 million.
The new LEGOLAND Japan site will add to Merlin's existing portfolio of six LEGOLAND parks in five countries and will be opened under the company's 'operated and leased' model through which the infrastructure of the park is funded by a third party.
Under the terms of the agreement Merlin will directly invest approximately GBP53 million in the park over the next three years and lease the balance of the assets from a company owned by KIRKBI Invest A/S, a subsidiary of KIRKBI A/S, a privately held investment and holding company with a 75% ownership share in the LEGO Group and a 29.9% shareholding in Merlin.
KIRKBI's investment, which is separate to that of Merlin's, will be funded through a combination of equity and external debt provided by Sumitomo Mitsui Banking Corporation. Merlin's investment is expected to deliver returns consistent with the group's stated pre-tax cash ROIC target of 20%, said the company.
Merlin estimates that the project will cost approximately GBP185 million in total.
"The park will make a significant contribution to the growth of the Merlin group from opening in the second quarter of 2017, as well as supporting our continued geographic diversification. Long term, we continue to believe that there is significant opportunity for the LEGOLAND brand, with the potential for up to 20 parks across the world and we remain committed to our target of opening a new park every two to three years," said Merlin Entertainments Chief Executive Nick Varney.
The new park - located approximately two hours from Tokyo and one hour from Osaka - will become the second biggest theme park market in the world, according to independent research from the Entertainment and Culture Advisors. The company said LEGOLAND Japan will be of similar scale to the recently opened LEGOLAND parks in Malaysia and Florida and is expected to employ up to 1,000 staff.
The company added that the City of Nagoya has agreed to support the park with the development of the required local travel infrastructure, including a 5,000 space multi-storey car park and improved road connectivity to the park.
Merlin Entertainments currently operates six LEGOLAND parks in five countries, including the most recent new openings in Florida (2011) and Malaysia (2012), and plans to open a seventh in Dubai in 2016. The LEGOLAND Park Operating Group recorded 14.2% revenue growth in 2013 delivering over GBP350 million in revenue with an EBITDA margin of 36.0%.
Shares in Merlin Entertainments were trading marginally higher shortly after the market open, up 0.42% at 355 pence per share.
By Alice Attwood; [email protected]; @AliceAtAlliance
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