News & Analysis

Blackstone sells stake in Universal Orlando

NBCU will pay $1bn to buy Blackstone's 50% stake in the theme park, which the firm reportedly acquired for $275m in 2000.

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NBCUniversal announced an agreement to purchase The Blackstone Group’s 50 percent stake in the Universal Orlando theme park Monday.

Blackstone paid a reported $275 million for the stake in 2000 from Rank Group. The deal included an additional payment of up to $75 million contingent on performance. The 2000 deal put an enterprise value on the company of $2 billion, while this week's deal values the company at $3.16 billion, according to a source with knowledge of the transaction.

It's not clear if Blackstone made any equity injections during its 11-year hold period. The firm made the investment in Universal Orlando through its third private equity fund, which raised $3.7 billion in 1997. That fund was producing a 13.2 percent internal rate of return as of 30 September, 2010 and a 1.8x return multiple, according to performance numbers from the California Public Employees' Retirement System.

The $1.025 billion agreement will give NBCU and its affiliates a 100 percent share of the theme park, which includes Universal Studios Florida, Universal’s Islands of Adventure and Universal CityWalk. The enterprise value of the deal is $3.165 billion.

Theme Park
Deal
NBCU will purchase the park using cash, a $400 million note from an affiliate of the Comcast Corporation and borrowings from its existing revolving credit facility.

Blackstone offered to sell its stake to NBCU in March, giving them until June 12 to purchase the stake. At that point, Blackstone would have had 270 days to sell its stake in Universal Orlando, as well as NBCU’s, to a third bidder.

Under Blackstone, the park enjoyed a recent surge in profits and ticket sales due to the opening of the Wizarding World of Harry Potter in June 2010. The park posted a $45.8 million profit in the first quarter after losing $36.4 million in 2010.

Blackstone has been involved in a number of theme park deals recently, acquiring Busch Entertainment from Anheuser-Busch InBev for $2.7 billion in 2009. The group also has holdings in Merlin Entertainments and its Legoland theme parks, as well as Italy’s Gardaland and the UK’s Thorpe Park.