Merlin to price London float in top half of range -sources

Reuters - UK Focus

By Kylie MacLellan

LONDON, Nov 6 (Reuters) - Madame Tussauds owner MerlinEntertainments is expected to price a planned stock marketlisting in London in the upper half of its original rangefollowing strong investor demand, sources close to the deal saidon Wednesday.

Private equity-backed Merlin operates the global waxworksmuseum franchise and dozens of other attractions in 22countries.

Two sources said it now plans to sell at least 25 percent ofthe the company in the offering, which will value Merlin at asmuch as 3.3 billion pounds ($5.3 billion). It initially said itwould float a minimum of 20 percent.

Shares in the world's second-largest visitor attractionoperator behind Walt Disney Co are being offered atbetween 305 pence and 330p each, the sources said, compared toan original range of 280p to 330p.

Order books on the sale are heavily oversubscribed, one ofthe sources added.

A spokesman for the company declined to comment.

Merlin, which on Monday said it would be closing the offerearly, received enough orders for all the shares within a day ofthe sale launching, the sources said.

On Tuesday, analysts at Numis, which is not involved in theoffering, said in a note they estimated Merlin was worth 360pper share and recommended investors put in orders at the top endof the range.

"Merlin's entrenched market position, strong track record oforganic growth and value creation, and attractive expansionopportunities in a growing market are all important drivers ofthe valuation," the note said.

At 305p per share, the mid-point of Merlin's original range,Numis said the company would be valued at an estimated full-year2014 EV/EBITDA multiple of 9.8 times.

That puts it at a discount to the average of UK leisure andconsumer companies such as hotel and coffee shop operatorWhitbread (LSE: WTB.L - news) which have estimated 2014 EV/EBITDA of 12.1times, and US theme parks such as Disney and SeaWorld which have an average forward EV/EBITDA ratio of 10.3 times.

Part of the listing for Merlin, whose brands also includethe Legoland theme parks and the London Eye Ferris wheel, willconsist of new shares, which it expects to raise 200 millionpounds to reduce debt.

Its owners, private equity firms Blackstone Group andCVC (Taiwan OTC: 4744.TWO - news) , company directors and employees and the Danish investmentfirm Kirkbi A/S which controls Lego Group, are also selling someof their holdings.

Merlin is due to make its stock market debut on Nov. 8.

Goldman Sachs (NYSE: GS-PB - news) and Barclays (LSE: BARC.L - news) are running thesale and are joint bookrunners along with Citi and MorganStanley (Shenzhen: 002588.SZ - news) .

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