Merlin Group (MERL) unlikely to shake interest from shareholder

Shares rose as the group doubled down on its current strategy amidst activist shareholder calling for privatisation

Article updated: 23 May 2019 10:30am Author: Graham Spooner

  • Group provides response to activist shareholder who has built nearly a 10% holding
  • ValueAct Capital calls for Group to take itself private
  • Management unlikely to shake ValueAct in the short term and conclude the best option for shareholders is to continue with current strategy

On a morning where investors are being met by a sea of red across their trading screens Merlin Entertainments appears to have bucked the trend with a 4.6% rise. The group, who runs 130 attractions across 25 countries, has this morning come out with a response to an activist shareholder (ValueAct Capital) who has built a 9.3% holding in the group which owns a number of well-known attractions such as LEGOLAND and Madame Tussauds.

The activist has called for Merlin to take itself private; taking the view that a deal at over 400 pence (current price 346p) could be possible, as a result of the fall in the share price since last June.

The two have had discussions on the future path of the group with Merlin’s management concluding the best option for shareholders is to continue with the current strategy, while the activist believes private ownership would be a better way forward. Investors should expect increased news flow as Merlin is unlikely to be able to wave a magic wand to get rid of ValueAct.

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Graham Spooner

Investment Research Analyst

Graham started out as a fully authorised dealer on the Stock Exchange trading floor and for various banks, before becoming an FSA-approved investment adviser. Now a respected voice in the media, Graham’s share tips and comments on the markets are frequently sought by the national press.