Private equity firm Blackstone Group is buying Tussauds Group, owner of Madame Tussauds wax museums, for about $1.9 billion in cash, creating the world's second-biggest theme park group, behind Walt Disney Co.
The deal, announced Monday, would combine Tussauds, one of London's biggest tourist attractions, Sea Life aquariums and the London Eye Ferris wheel with New York-based Blackstone's Legoland and Gardaland theme parks, which are held in its Merlin Entertainments Group.
The newly enlarged tourist attraction group plans to accelerate expansion, particularly in North America, with a Legoland in the Kansas City, Mo., area and a Sea Life in California already in the works.
"If we were sitting here five years from now, I think we'd be disappointed if we weren't operating 10 businesses, from three now, under three different brand names in America," Merlin Chief Executive Nick Varney said.
Tussauds is also planning to open wax museums, home to lifelike re-creations of the world's biggest celebrities such as Queen Elizabeth and Brad Pitt, in Washington this year and in Hollywood in 2008.
The group is planning to spend as much as $118.2 million each year to roll out four or five attractions to exploit the brands before an eventual initial public stock offering, Varney said.
"I think all those things point to a stock market flotation in three or four years' time," Varney said. "That is probably the most likely outcome."
Dubai International Capital, a government-backed buyout firm, bought Tussauds Group for about $1.5 billion two years ago. It is retaining a 20% stake in the merged group.
The combined 50 attractions and four hotels drew about 30 million visitors last year. Only Disney's theme parks attract more visitors globally.
Merlin and Tussauds currently rank sixth and seventh, respectively, Varney said.
The new group, which does not anticipate much in the way of cost savings from the combination, aims to create clusters of short-visit and long-term attractions with related hotels, enabling more efficient marketing and revenue growth.
Tussauds was sold by Pearson, the world's biggest educational publisher, in 1998 to Charterhouse Capital Partners. It has grown to 6,000 staff members last year from 2,000 when it was acquired, Tussauds CEO Peter Phillipson said.
Britain-based Tussauds Group also operates the Alton Towers, Thorpe Park and Chessington World of Adventures theme parks in Britain.
Merlin operates the Dungeons and Earth Explorer tourist sites in addition to four Legoland theme parks and Italy's biggest theme park, Gardaland.