Charterhouse finds a buyer for Tussauds

Charterhouse finally achieved the sale of Tussauds Group, selling the UK waxwork museum and theme park operator to Dubai International Capital (the investment arm of state-owned Dubai Holding) for £800m. DIC approached Charterhouse earlier this year and had remained the only party in discussions to acquire Tussauds. Charthouse tried to sell the business last year for £900m but an auction including BC Partners, Permira and KKR fell short of expectations. Tussauds was then recapitalised.

Charterhouse acquired Tussauds in 1998 in a £352m buyout from Pearson. The company has since expanded its network of waxwork museums to include sites in New York, Las Vegas, Amsterdam and Hong Kong, in addition to its flagship London attraction. Chief executive Peter Phillipson will retain his title, along with the rest of the group’s management team, which has been together for about four years. Eric Nicoli will remain as non-executive chairman.

Tussauds Group’s profit reached £70m in 2004, up from £31m in 2000. Management will re-invest around 50% of its returns from the buyout back into the group, according to a deal source. The acquisition of Tussauds is the first private equity deal for DIC, which recently bought a 1% stake in vehicle maker DaimlerChrysler for £530m. The firm was set up last October under chairman Mohammed al-Gergawi and chief executive officer Sameer Al Ansari to make private equity investments and co-investments outside the Middle East.

DIC will focus on larger buyouts, developmental capital and funds. The company is understood to be controlled by the Crown Prince of Dubai, Sheik Mohammed bin Rashid al-Maktoum.

“This transaction demonstrates our determination to become a serious investor in the private equity market and draws on our existing management skills in the global leisure sector,” Al Gergawi said.

Dubai Holding’s interests include Dubailand, expected to become one of the largest theme parks in the world, and Jumeirah International, which has a portfolio of international hotels including the Carlton Tower London. Tussauds operates a group of UK theme parks – Alton Towers, Chessington and Thorpe Park – and Heide Park in Germany. It has a one-third shareholding and operates the London Eye observation wheel.

DIC was advised by HSBC, while Lazard advised Charterhouse. Existing bank debt will be rolled over in support of the buyout. The equity contribution is understood to be around £500m, including about £300m from DIC itself.