Disney boosts stake in Paris theme park, offers to buy rest

Walt Disney plans to take full ownership of its ailing theme park in Paris to get the resort under control after 25 years of ups and downs at its first and only outlet in Europe.
 
Disney is acquiring a 9 per cent stake in Euro Disney SCA from Saudi Prince Alwaleed Bin Talal’s Kingdom Holding for 2 euros ($2.13) a share, payable in Disney stock. That will give it an 85.7 per cent holding, and it’s offering the same price in cash for the rest, according to a statement Friday. The offer is 67 per cent higher than Euro Disney’s closing price Thursday.
 
Chief Executive Officer Bob Iger is doubling down on the troubled resort, which has already been bailed out by Disney more than once. Hurt by sputtering European economies in recent years, the park’s finances were further hit by the 2015 Paris terrorist attacks and challenging business conditions that continued through 2016, Burbank, California-based Disney said.
 
Disney said it will support Euro Disney’s recapitalisation of as much as 1.5 billion euros. That follows a 2014 rescue package, when the resort was pledged at least 1 billion euros over 10 years to add attractions and spruce up grounds.
 
The new plan “affords maximum flexibility to shareholders, addresses the group’s financial needs and reflects its ongoing support for the long-term success of Disneyland Paris,” Disney said.
 
Shares of Euro Disney jumped 66 per cent to 1.99 euros at 3:37 p.m. in Paris, giving the company a market value of 1.56 billion euros. Disney added 0.2 per cent to $109.66 in New York Friday for a market value of $173 billion.
 
The investment marks a deeper commitment by Disney to its global theme-parks business. The entertainment giant opened a $5.5 billion resort in Shanghai last June that drew 4 million guests in its first four months, and is creating new attractions based on hit films. Disney is building “Star Wars”-themed lands at its parks in Orlando and Anaheim, California, and is also on schedule to open an “Avatar” attraction at its Animal Kingdom park in Florida in May.
 
This week, Disney reported a 13 per cent gain in theme-park profit to $1.11 billion, buoyed by higher spending at the domestic and international parks, including a Shanghai resort, which opened in June. Profit at the theme-park division topped earnings from businesses including the cable-TV unit, home to ESPN and the Disney Channel, and its film arm.

BLOOMBERG