Ardent Leisure to sell USA-based Main Event division and focus on Australian attractions
Ardent Leisure Group has announced that it is to sell its USA-based Main Event division to restaurant and arcade chain operator Dave & Buster's Entertainment for $1.1 billion (US$835 million) and will look to become debt free and focus on its Australian firm attractions.
The deal follows a strategic review of Main Event social entertainment centre business, consistently its best performing unit by Ardent and private investment firm RedBird Capital Partners, which took a 24.2% stake in June 2020 when it came in as an investor.
RedBird manages more than US$5 billion in assets and also has a stake in Fenway Sports Group that owns English football club Liverpool.
Main Event operates more than 5,000 centres across 17 U.S. states, including bowling alleys, arcade games, laser tag and virtual reality arenas, and accounted for more than 90% of the company's total revenue last year.
Ardent will get US$487 million in cash for its 72.6% stake in Main Event, which it will use to repay debt and return $430 million ($326.2 million) to shareholders, it said on Wednesday.
Following the sale, Ardent said it would work to revitalise its Australian attractions, which have suffered over the last two years due to the pandemic and are still impacted by the reputational damage of the deaths of four guests at Dreamworld in 2016.
In a statement released late yesterday, Ardent advised "the company will become solely focused on its theme parks business, have no debt and will have a strong cash position to support the ongoing recovery of the business.”
The board said it would unanimously recommend the proposal to its shareholders, provided no superior proposal emerged for the business or for Ardent itself.
Dave & Buster's is expecting the deal, which is likely to close later this year, to add to earnings. It also expects cost savings of $20 million within the first two years from store support center consolidation and supply-chain efficiencies.
The sale will leave Ardent’s assets as Gold Coast attractions Dreamworld, WhiteWater World and SkyPoint, which Ardent may look to sell.
Writing on the Parkz theme park enthusiasts website, Richard Wilson points out that “with the sale of Main Event, Ardent Leisure sits in a peculiar position. It is now for all intents and purposes an unprofitable business, with land and infrastructure assets worth several hundred million. Ardent Leisure's market capitalisation is twice the value of their remaining assets. That's assuming that their share price doesn't take a dive once the Main Event sale is completed and shareholder returns are distributed.”
Commenting on the ongoing costs being incurred at Dreamworld and the need for ongoing investment, Wilson asks “(does Ardent) continue with the slow, costly and uncertain process of transforming Dreamworld into the profitable theme park it once was?
“Or do they cut their losses now, and find a buyer for Dreamworld, a buyer for surplus land, and attempt to deliver shareholders another windfall like they announced with Main Event?
“That is, sell now without incurring any further losses at Dreamworld, and without having to embark on a capital splurge that would burn up much of the cash available to them long before they see the kinds of profits the theme park once delivered.”
Images: Ardent Leisure Group has announced that it is to sell its USA-based Main Event division (top) and Dreamworld from the air (below).
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