Merlin rejects ValueAct call to go private

Merlin Entertainments has rejected a call by one of its biggest shareholders for the theme park operator to find a buyer to take it private.

ValueAct, a US activist investor, wrote to Merlin's chairman John Sunderland telling him there was "significant private capital interest" in acquiring the FTSE 250 company. The group, which owns Madame Tussauds and Alton Towers, could attract an offer of about 450p a share, ValueAct said.

"Private ownership is simply better placed than current public shareholders to underwrite the investments Merlin must make and to align employee incentives appropriately," ValueAct wrote, according to the Financial Times. ValueAct is Merlin's second-biggest shareholder with a 9.3% stake.

Merlin said it had discussions recently with ValueAct and would maintain the dialogue but that it was sticking to its existing setup.

The company said: "The board regularly considers all options for driving shareholder value and has concluded that it remains in the best interests of all its shareholders to continue to pursue its current strategy to create a high growth, high return, family entertainment company based upon strong brands and a global portfolio that is naturally balanced against the impact of external factors."

ValueAct said it supported Merlin's management and its plans to invest in the business for long-term returns. But the investor said it could take many years for the company's valuation to reflect that investment.

Merlin has had a rocky history as a public company after its former private equity owners floated it in 2013. The company has issued profit warnings and was fined and heavily criticised after a rollercoaster accident at Alton Towers in 2015 left people with serious injuries.

The company said trading was in line with expectations and that it had made good strategic progress by opening more attractions and selling its ski resort business.

"The board remains fully confident in the ongoing execution of Merlin's strategy and that its successful delivery will create significant value for shareholders," Merlin said.

Merlin shares rose 4.7% to 348p at 0819 BST.