DealZone

The Playgrounds of Private Equity

October 8, 2009

Blackstone Group’s plan to buy Anheuser-Busch InBev’s U.S. theme parks for up to $2.7 billion may turn out to be a brilliant expansion into the recession-squelched entertainment industry. But it could also prove to be a roller coaster in terms of value if Americans don’t rediscover fun as part of the economic recovery.

For its part, AB InBev at least has a product that can sell equally well when people are depressed. The deal helps to satisfy its goal of raising $7 billion from divestments.

The theme park deal is one of the largest private equity transactions this year. It will add Busch Entertainment Corp’s 10 parks — including three SeaWorlds and two Busch Gardens — to Blackstone’s existing fun stable housing Madame Tussauds wax museums, Legoland and the London Eye Ferris wheel. mumblings about anti-trust issues, the private equity entertainment empire is active in a buyers market. Some say NBC Universal’s theme park could soon wind up on the block if GE sells content assets to Comcast.

Of the $2.3 billion Blackstone will pay up front, only $1 billion is equity. More than half of the deal is being financed through borrowing, which in and of itself may be reason for Blackstone CEO Stephen Schwarzman to scream with delight. Getting financing in these troubled times is no ride in the park.

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