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Tussauds sizes up £1bn flotation

Saeed Shah
Monday 05 May 2003 00:00 BST
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The public may get the chance to buy a slice of the world-famous Madame Tussaud's waxworks attraction after its owners confirmed yesterday they are considering a £1bn flotation.

Charterhouse Development Capital is weighing up ways to exit its Tussaud's Group investment, which it bought five years ago, from Pearson, for £353m. The business includes Alton Towers, Thorpe Park, Chessington World of Adventures, 25 per cent of the London Eye and Heide Park in Germany.

In recent weeks, Charterhouse has held a "beauty parade" of a number of leading City investment banks, including Citigroup, Merrill Lynch, Deutsche Bank and UBS. The private equity house asked the banks for their ideas on what to do with the business.

A source close to Charterhouse said: "Four options are being examined but there is no hurry." The four possibilities are: a public offering; a trade sale, a "secondary buyout" deal with another private equity house; or keeping the business but refinancing it.

The valuation put on the business is between £800m to £1bn, based on forecast earnings for the current financial year of £70m. Such an aggressive valuation depends on the strong brands in the group and its uniqueness. Over the past 18 months, some £200m has been invested in the business, including a second hotel at Alton Towers.

The secondary buyout market is strong at the moment and, if Charterhouse wanted to make a move soon, it would probably go for this option. Charterhouse argues that it has turned around the business but there is a growth phase that is yet to come, making it attractive to another financial buyer. However, the prospect of future growth opportunities may tempt Charterhouse to keep Tussaud's and refinance it if the sale process does not generate a high enough price.

Charterhouse sources stressed that they were "not under pressure" to make a decision. A float would be unlikely to come until the end of this year or early 2004.

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