Private equity giants eye Ardent’s Main Event

Ardent Leisure operates the Main Event Entertainment centres in the US.

Private equity groups such as Kohlberg Kravis Roberts, Apollo Global Management and Blackstone could be lining up for a stake in Ardent Leisure’s Main Event entertainment centre business in the US.

Another group that may be in talks is the world’s largest ten-pin bowling centre owner Bowlero Corp, owned by private equity firm Atairos Group.

Apollo is a backer of New York-listed Chuck E. Cheese that could see Main Event as an opportunity, while Blackstone owns Britain’s Merlin Entertainment.

Bowlero and Chuck E. Cheese could offer expertise to Ardent Leisure in running the offshore operation.

Other private equity funds that could be circling include Carlyle and Bain Capital.

As first reported by DataRoom on January 29, Goldman Sachs has been hired to explore options for the Main Event business.

While delivered its results on Friday, the company described the move to recruit Goldman Sachs not as one to sell the business but “to seek potential partners to accelerate growth”.

But sources in the market see it differently, saying that they believe that the business has been up for sale since June.

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If Ardent sells at least part of the business, it could provide more capital for its struggling Australian operations.

For the first six months of 2020, the $676m Ardent was losing money, plunging $22.5m into the red. It also booked losses for the same period in the previous year.

Its theme park division, which includes Dreamworld on the Gold Coast, lost money in the period, while Main Event generated $16m of earnings before interest, tax, depreciation and amortisation.

One line of thoughts is that the Term Loan B funding arrangements in place for Main Event may create challenges in extracting cash from that business to fund the capital spending needed for the Australian arm, which is why a partner was being sought.

The possibility of a selldown of Main Event was being explored as early as 2017, as reported by DataRoom at the time, as the company’s performance was reeling after the Dreamworld tragedy six months earlier when four people were killed on the Thunder River Rapids Ride.

The potential selldown of Main Event comes as turning a profit at the theme parks remains heavy going in Australia, where tourism is likely to be impacted by the coronavirus.

Ardent’s rival Village Roadshow demonstrated the challenge of reaping profits from theme parks on Friday when it posted a $26m loss for the first six months of the financial year.

Village — currently at the centre of a takeover battle between Pacific Equity Partners and BGH Capital — blamed the coronavirus for falling revenue.

Village owns nearby theme parks including Movie World, Sea World and Wet n Wild.

Its film distribution business is likely to face impacts from the coronavirus, as China shuts cinemas and Hollywood studios hit the pause button on the distribution of content.

It will be interesting to see if BGH and PEP fall away as suitors on the back of the disappointing results.