The Center Parcs holiday company agreed to be bought by the US private-equity group Blackstone yesterday for £205.4m.
Its cash offer of 80p a share represents a 16 per cent premium to Center Parcs' market value, but is one-fifth lower than the price at which it floated in 2003. Its shares closed up 12p at 81p.
The company, which runs holiday villages in Nottinghamshire, Cumbria, Suffolk and Wiltshire, had not been looking to sell when Blackstone approached several weeks ago. The management took soundings from six of Center Parcs' leading shareholders, which include Foreign & Colonial, New Star Asset Management and HSBC Asset Management. All looked favourably on the offer.
Some 23.5 per cent of Center Parcs shareholders have backed Blackstone's bid. They, and those that run Center Parcs, think Blackstone has the financial muscle and management expertise to grow the business in a long-established and settled British holiday market.
Martin Dalby, the chief executive of the holiday village operator, said: "Ours is quite a mature business. Growth prospects are quite modest. With the rising cost of energy, we did not feel we could deliver profits growth at much more than inflation."
No discussions have been held about whether Center Parcs' management will be kept on after the business changes hands, but Mr Dalby said he wanted to stay.
Since floating nearly two and a half years ago, Center Parcs has faced constant cost pressures, which saw its shares fall to less than 50p. Some analysts attributed negative sentiment towards Center Parcs within the City to the speed with which the company was floated in December 2003.
Collins Stewart, the broker, employed an innovative fast-track listing process - securing backing from a group of investors, buying the company and floating it immediately.
That, it was said, failed to give analysts sufficient time to understand the business or its risks.
City experts welcomed Blackstone's bid. Greg Feehely, an analyst with the smaller companies investment bank Altium Securities, said: "We have been commenting for some time that Center Parcs looked vulnerable to approaches, so this approach does not come as a surprise and indeed this offer may see other players come into the fray. We feel that the outlook in the short- to medium-term is very challenging and, in the absence of competing offers, shareholders should accept 80p."
Blackstone has a track record of investment in leisure companies. It owns Legoland, the London Dungeon and a string of theme parks across Europe.Reuse content