Dubai scales back stake in Merlin

Dubai International Capital, the investment arm of Dubai Holding, sells most of its interest in Merlin Entertainments Group, the second-biggest operator of leisure attractions in the world after Disney.

Dubai International Capital (DIC), the investment arm of Dubai Holding, sold most of its interest in Merlin Entertainments Group, the second-biggest operator of leisure attractions in the world after Disney. Merlin said that DIC had reduced its stake from 17 per cent to 6 per cent, selling two-thirds of its share to KIRKBI, the family-owned investment company that controls the Lego Group.

KIRKBI, which was already a shareholder in Merlin, increased its stake to 34 per cent from 23 per cent. The deal took place last summer, Merlin said. DIC bought the Tussauds Group, one of the biggest leisure operators in Europe, for £800 million (Dh4.61 billion) in 2005. The group's attractions included the London waxworks museum Madame Tussauds, the theme parks Alton Towers and Thorpe Park, and the London Eye, which was acquired in 2006.

Two years later, Merlin Entertainments Group bought the Tussauds Group from DIC to create the second-largest attractions operator in the world. DIC said at the time that it kept a 17.51 per cent stake in the combined company and received £1.02bn. "Merlin Entertainments continues to benefit from long-term, stable relationships with all its investors," said Nick Varney, the chief executive of Merlin.

DIC's funds have been invested in propping up the other companies in its portfolio. DIC bought the engineering company Doncasters Group for £700m in 2006 and in the same year it also bought Travelodge, the hotel chain, for £675m from Permira Funds. It also spent ?850m (4.25bn) in 2007 on an acquisition of Mauser, the industrial packaging company. A representative of DIC confirmed the reduction of its stake in Merlin but declined to comment further.

Merlin has 59 attractions, six hotels and two holiday villages in 13 countries across three continents. The company has 13,500 employees. Merlin also operates Warwick Castle and Chessington World of Adventures. The Blackstone Group, Merlin's majority owner, signed an agreement in 2005 for Merlin Entertainments to own and manage the four Legoland parks. Blackstone bought the parks for ?375m, while the Lego Group kept a 30 per cent interest.

Merlin is reported to have put plans for an initial public offering on hold. DIC came close to acquiring Liverpool Football Club in 2006, but the deal never came together. [e-mail]