Earlier this month The Blackstone Group, with an A+ rating with stable outlook from Fitch and A rated with stable outlook from Standard & Poor’s, reported an economic net income after taxes of US$275 million for the third quarter of 2009, up from US$181 million for the second quarter. In October the Group announced an agreement to acquire Busch Entertainment Corporation, operator of ten entertainment parks throughout the United States including three SeaWorld parks in Orlando, Florida, San Antonio, Texas, and San Diego, California, two Busch Gardens parks in Tampa, Florida and Williamsburg, Virginia, and other family entertainment attractions in Orlando, Florida, Tampa, Florida, Williamsburg, Virginia, and Langhorne, Pennsylvania.

In a press statement released on 6 November this year Stephen A. Schwarzman, Chairman and Chief Executive Officer, commented, “We see many opportunities to deploy our substantial available capital across each of our asset management businesses with attractive potential risk-return for our fund investors.” It now seems that the US private equity company is set to bid for the UK’s Gala Coral, investing £300 million in return for a majority stake.

The Gala Coral Group operates significant businesses in the bookmaking, bingo and casino markets, both on the high street and online, employing over 19,000 people across its various trading divisions. Private equity firms Candover and Cinven acquired the Group in February 2003 and in August 2005 a third investor, Permira, bought a stake in the Group. The Blackstone bid for a UK company in the entertainment market is not its first.

In May 2005 affiliate Blackstone Capital Partners IV acquired Merlin Entertainments, market leader in the UK and Europe of branded visitor attractions under the Sea Life, Dungeons, Seal Sanctuary and Earth Explorer brands, and worldwide second only to Disney. Merlin operates 28 attractions in eight European countries including, in the UK, London Eye, Madame Tussauds, Legoland, Alton Towers and Thorpe Park as well as several other well-known venues.

The bid by Blackstone for Gala Coral would offer senior lenders, presently owed around £2 billion, the opportunity to keep their debt in place while offering other debt holders a minimum equity stake. Gala Coral has seen its earnings fall and in its half-year statement commented that trading conditions remain very challenging across the sector. Government tax hikes on bingo and additional levies on Amusement Machines have had a heavy impact on Gala Coral business. (E-11.25.09)

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