March 24, 2017
Over seven years, the Blackstone Group nearly tripled its investment in SeaWorld, the home of Shamu and other killer whales.
But that home-run return came with a major headache: dealing with the repercussions of “Blackfish,” a searing documentary that castigated SeaWorld’s treatment of orca whales in captivity.
Now Blackstone is finally free of that burden. On Friday, the company sold its stake in SeaWorld to Zhonghong Group, a Chinese investment firm, for about $449 million. The deal will pave the way for SeaWorld to open parks in China.
The sale was a quiet end to an investment Blackstone had once been happy to promote. At onetime, the company let two SeaWorld penguins roam the halls of its stately Manhattan offices and shake appendages with its chief executive, Stephen A. Schwarzman.
But owning SeaWorld became a liability to its reputation after “Blackfish” debuted at the 2013 Sundance Film Festival. The film, which was eventually picked up by CNN, offered an indictment of SeaWorld’s care of Tilikum, an orca that became one of the park’s biggest stars, but that also was involved in the deaths of three people, including his trainer.
Outrage over the film metastasized quickly into calls to prohibit keeping killer whales in captivity. Firms like Southwest Airlines severed ties to SeaWorld. The controversy eventually depressed attendance at SeaWorld’s theme parks, leading to the ouster of its chief executive in 2015.
Since then, SeaWorld has stopped breeding whales and announced plans to phase out its famous orca shows in favor of attractions without live animals.
Nevertheless, SeaWorld proved a winner for Blackstone financially. The firm’s final return amounted to about $1.7 billion, or 2.7 times its original investment, according to a person briefed on the matter, who was not authorized to speak publicly. That figure includes all of the stock Blackstone sold and the dividends it collected from the company.
SeaWorld said that Blackstone sold its remaining 19.5 million shares to Zhonghong at $23 each, or 26 percent more than the closing price Thursday.
Blackstone declined to comment on the stake sale.
It gained control of SeaWorld in 2009 when it bought Anheuser-Busch InBev’s theme parks. That deal made Blackstone — which at the time owned Universal Studios Orlando and the Madame Tussauds wax museum franchise — the country’s second-biggest theme park operator, behind Disney.
The 2009 deal also gave Blackstone control of parks like Busch Gardens and Sesame Place. But it was SeaWorld and its killer-whale attractions in Florida, Texas and California that were clearly the crown jewels.
“We are delighted to be investing in a company with such iconic brands, irreplaceable assets and strong growth prospects,” Michael Chae, a senior Blackstone executive, said at the time.
For several years, business was good. Profits in 2012 were four times what they were the previous year. Blackstone took SeaWorld publicin April of 2013, raising $702 million in the offering.
Then “Blackfish” hit.
SeaWorld shares have fallen nearly 46 percent since the initial offering. They closed up 4.7 percent Friday, at $18.13. Profits have fallen annually since 2012, leading to a $12.5 million loss last year.
Zhonghong is a conglomerate with holdings in real estate, leisure and tourism. Among its notable deals was its acquisition last year of the travel company Abercrombie & Kent.
“Zhonghong Group is making a significant, long-term investment in SeaWorld, reflecting their appreciation of the strength of our brand, our potential to grow the company and a shared commitment to protect wildlife and the environment,” Joel Manby, SeaWorld’s chief executive, said in a statement.
SeaWorld will advise Zhonghong on new parks in China, Taiwan, Hong Kong and Macau. In return, Zhonghong will gain two seats on SeaWorld’s board.
“We are delighted to engage with SeaWorld to bring this iconic, world-class family entertainment brand to China,” said Yoshikazu Maruyama, president of Zhonghong’s American holdings. “SeaWorld’s commitment to inspiring guests to protect animals and our oceans is increasingly relevant to people all around the world.”
Source: New York Times