Merlin  Entertainments  Group  announces  recommended takeover  offer  for  Living  and Leisure Australia Group

• Merlin  Entertainments  Group (“Merlin”),  Europe’s  leading  and  the  world’s  second largest  visitor  attraction  operator,  has  made  a  recommended  takeover  offer  (“Offer”)  via  its  subsidiary  Merlin  Entertainments  (Australia)  Pty  Limited  (“Merlin  Australia”)  for  Living  and  Leisure  Australia  Group (“LLA”),  the  owner  and operator of nine leading visitor attractions in the Asia Pacific  region, as well as a management contract in Dubai.
• The  Offer  to  acquire  LLA,  if  accepted  by  LLA  Securityholders,  would  accelerate the  development  of  Merlin’s  Asia Pacific  operations  and  builds  on  its international  expansion  strategy,  based  on  the  rollout  of  its  iconic  global attraction brands
• The Offer of 5.14 cents  cash per LLA stapled security (“LLA Security”) values LLA  at  approximately  A$140 million on  an  equity  value  basis,  and  implies  an enterprise value for LLA of approximately A$244 million
• LLA  Directors  unanimously  recommend  the  Offer,  in  the  absence  of  a  superior proposal, and subject to an Independent Expert opining that the Offer is fair and  reasonable

Merlin  today  announces  that  Merlin  Australia,  has  executed  an  Implementation Deed with  LLA  pursuant  to which  Merlin  Australia  will  make  a  recommended  offmarket  takeover offer for all the stapled securities in LLA at 5.14 cents cash per LLA  Security.

Related:  MERLIN ENTERTAINMENTS Half Year Review to June 2011 /  Nagoya selected as Location for LEGOLAND Theme Park / Merlin Entertainments' John Jakobsen on the Rise and Rise of Legoland

The Offer implies an enterprise value for LLA of approximately A$244 million  which represents  a  multiple  of  7.2x  operating  FY11  EBITDA  of  A$34.0  million. The  price offered  per  LLA  Security  represents  a  157%  premium  to  the closing  price  of  LLA  Securities  on  20  October  2011,  the  day  prior  to  LLA’s  announcement  that  it  was  conducting a review of strategic initiatives aimed at reducing the discount between  the  listed  price  of  LLA  Securities  and  fair  value. The  LLA  Board  has  stated  that  no superior  proposal  has  emerged  as  at  the  date  of  this  announcement.  The  LLA
Directors unanimously recommend the Offer, in the absence of a superior proposal, and subject to the Independent Expert opining that the Offer is fair and reasonable. Each LLA Director who has an interest in LLA Securities has stated that they intend to  accept  the  Offer  in  respect  of  LLA  Securities  which  they  own  or  control,  in  the  absence of a superior proposal, and subject to the Independent Expert opining that  the Offer is fair and reasonable.

In addition, Merlin Australia has entered into a pre-bid agreement with LLA’s largest  securityholder,  Arctic  LES  (Ireland)  Limited,  to  acquire  a  stake  giving  Merlin  a  relevant interest in 19.99% of the LLA Securities on issue.

Merlin Australia has also agreed to acquire Living and Leisure Australia Management  Limited  (“LLAM”),  the  responsible entity of Living and  Leisure Australia Trust,  from  Arctic  Capital  Limited if  Merlin  Australia  obtains  effective  control  of  LLA, for  a  purchase price based on the net tangible assets of LLAM.

The  Offer  to  acquire  LLA,  should  it  complete,  offers  an  excellent  opportunity  for Merlin to significantly increase its network of world class international attractions in  Asia and Australia, successfully building on the acquisition of the Sydney Attractions  Group earlier this year ( see: Merlin Entertainments  Sydney Attractions deal With Village Roadshow Completes) . 

Merlin’s current attractions in  the Asia  Pacific  region include: in Australia and New Zealand,  Sydney  Aquarium, WILD  LIFE  Sydney, Sydney  Tower  Eye  and  SKYWALK  at the  Sydney  Tower  Eye,  WILD  LIFE  Hamilton  Island,  Oceanworld  Manly,  and  Kelly Tarlton’s  Antarctic  Encounter  and  Underwater  World  in  Auckland;  and  Madame Tussauds  attractions  in  Hong  Kong,  Shanghai  and  Bangkok.  Attractions  under development  in  the  region  –  both  of  which  are  planned  to open  in  2012  –  are  a major LEGOLAND theme park in Malaysia (see: Merlin Entertainments looking to Asia for New Legoland Theme Parks) and a Madame Tussauds in Sydney (see: Merlin Entertainments confirms Madame Tussauds to Open in Sydney in May 2012).

LLA owns and operates nine leisure attractions in the Asia Pacific region  as well as a management contract in Dubai,  through  three divisions: Oceanis Group  aquariums; Australia Alpine Enterprises ski fields; and Australian Treetop Adventures attractions. The addition  of  LLA’s attractions will mean  that,  post  completion, Merlin will  have almost  90 world  class attractions across North America, Western Europe, Asia and Australasia.

Nick Varney, Chief Executive Officer of Merlin, said: “This is a unique opportunity  for Merlin  to acquire not just a group of high quality  attractions  which  complement  our  existing  portfolio  of  iconic  global  attraction  brands,  but  which  also  increases  our  interests  and  exposure  to  Asia  and  Australia.  Completion  of  this  deal,  together  with  our  existing  ongoing  development,  would  represent an important step in our growth strategy for the region which we believe  is  full  of  opportunities  and  prospects  for  those  with  the  right  attractions  and expertise.

“Merlin also has a strong track record of growing the assets it buys. The acquisition of LLA would open up new markets to us and facilitate the continuing roll out of the 3SEA  LIFE, Madame Tussauds, Eye  and  LEGOLAND  brands  in  the  Asia  Pacific  region, complementing our existing strength in Western Europe and North America.”

Summary of the Offer

Merlin Australia’s proposal offers LLA Securityholders the opportunity to realise cash  proceeds for their LLA Securities at a material premium to historic trading levels in a low-liquidity security for which no dividends have been paid in the last four years.

The Offer consideration of 5.14 cents cash per LLA Security represents a premium of:

• 157% to the closing price of 2.00 cents per LLA Security on 20 October 2011, the last  closing  price  before  the  LLA  Directors  announced  a  review  of  strategic initiatives  aimed  at  reducing  the  discount  between  the  listed  price  of  LLA  Securities and fair value;
• 154% to the volume weighted average price of 2.02 cents per LLA Security in the three months leading up to and including 20 October 2011; and
• 68% to the Net Tangible Asset value of 3.07  cents per LLA Security as at 30 June  2011 based on 2,726.3 million LLA Securities on issue.

Conditions of the Offer

The  Offer  is  subject  to  a  limited  number  of  conditions,  including  a  90%  minimum acceptance  condition, approval  of  the Foreign Investment  Review  Board,  obtaining  certain  third  party  consents  and  other  customary  conditions.  Fudetails  of  the  conditions of the Offer are set out in Appendix

Further information

Merlin Australia expects to lodge its Bidder’s Statement containing the terms of the  Offer and other material information relevant for LLA Securityholders’ consideration  of  the  Offer  with  ASIC  and  ASX  shortly  and  for  this  to  be  despatched  to  LLA  Securityholders  as  soon  as  practicable.  The  Target’s  Statement  by  LLA  will  contain  further  information  for  LLA  Securityholders,  including  the  reasons  why  the  LLA  Directors are unanimously recommending that LLA Securityholders accept the Offer  in the absence of a superior proposal  and subject to the Independent Expert report  opining that the Offer is fair and reasonable.

Advisers to the transaction

Merlin  has  engaged  J.P.  Morgan  as  its  exclusive  financial  adviser  and  Mallesons Stephen Jaques as its legal adviser in relation to the proposed transaction.

For further information, please contact:
Merlin Entertainments Group: Tel: +44 (0) 208 899 6110/+44 (0) 208 948 3725 /+44
(0) 7774 415 372
Sally Ann Wilkinson/Penny Roberts