(Reuters) – Activist shareholder ValueAct on Thursday urged Merlin Entertainments to go private and said the owner of Madame Tussauds, the London Eye and Alton Towers could be valued at about 4 pounds a share, 20% more than its current price.
That would value the Legoland owner at more than 4 billion pounds. It had a market capitalisation of 3.42 billion pounds as of Wednesday’s close, according to Refinitiv Eikon data.
“We believe the runway for building hotels, second gates, and Legoland parks is robust, and the company is uniquely positioned as a global partner for intellectual property owners,” the San Francisco-based investor said.
Merlin did not immediately respond to Reuters’ request for comment.
“While Merlin obviously thrived as a private company, it may have come public too quickly,” said ValueAct, its second-largest shareholder with a 9.3% stake, in an open letter to the board.
“Merlin isn’t a bad business, but we do think it’s overvalued,” HSBC analysts had said on Monday, when it slapped the stock’s rating with a double downgrade.
Merlin, which floated in 2013 and is the world’s second-biggest visitor attractions group behind Walt Disney (NYSE:), struggled with rising labour costs and underperformance at Legoland parks last year which hit its stock price.
But it still guided to a “positive outlook” for 2019 and its shares have risen 4.5% so far this year.
Though ValueAct stressed that Merlin’s current trading price did not reflect its underlying value, it backed the company’s management, saying they had the right long-term focus which would help deliver sustainable shareholder returns.
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