Entertainment theme park operator SeaWorld Entertainment (NYSE:SEAS) announced plans to list as a publicly traded company in 2013. The company is currently owned by Blackstone (NYSE:BX), who bought it from Anheuser-Busch InBev (OTCQB:AHBIF) as part of the large beer company's attempt to sell non-core assets.
SeaWorld Entertainment owns 11 theme parks under the following brands:
· SeaWorld (Orlando, San Antonio, San Diego)
· Busch Gardens (Tampa, Williamsburg)
· Aquatica (Orlando, San Antonio, San Diego)
· Sesame Place (Pennsylvania)
· Discovery Cove
· Adventure Island
In November, SeaWorld also acquired Knott's Soak City from Cedar Fair, which it will rebrand as Aquatica San Diego and re-open in 2013.
Here is a list of strengths from the S-1:
· Iconic brands that consumers know and love
· World-class, differentiated theme parks
· Diversified business portfolios
· One of the world's largest zoological collections
· Strong competitive position
· Proven and experienced management team
· Proximity of complementary theme parks
· Attractive, stable profit margins and strong cash flow generation
· Care for our community and the natural world
Here is why I see SeaWorld as a good IPO investment, depending on valuation:
· International expansion - In the prospectus, SeaWorld mentions a goal as joint ventures to expand internationally. Previously, a group in Dubai wanted to license the company's brands to build four parks using the SeaWorld, Busch Gardens, Aquatica, and Discover Cove names. However, due to market conditions, the plan is on hold. If this deal does goes through, it will provide cash for the company and also could be the start of a huge international business
· Room for domestic growth - With all of the parks centered around three main cities, SeaWorld has opportunity to expand its brands throughout the USA or acquire existing brands to complement its parks further. Perhaps a merger with Merlin Entertainment could boost more family themed parks around the Legoland brand.
· Dividend payout - SeaWorld plans on paying a dividend according to its filing. The company has six theme parks open year round, while five are seasonal. The company produces large amounts of free cash flow from ticket sales and food and merchandise sales. This dividend could start small and grow, similar to what Cedar Fun has done.
· Growing attendance - In 2010, 22.43 million people attended parks owned by SeaWorld. In 2011 that number jumped to 23.63 million. For the nine months ending September of 2012, 19.86 million people have attended the park, compared to 19.04 million in the previous year's period. More people are attending the parks and they are also spending more, as spending per capita continues to increase.
Once publicly traded, SeaWorld will compete with Six Flags (NYSE:SIX), Cedar Fair (NYSE:FUN) and Universal Studios (NASDAQ:CMCSA). Blackstone also owns Merlin Entertainment, which operates Legoland, and could be spun off if this IPO is successful. Parent company Blackstone will be selling several assets in 2013 IPOs and looks like it could have a nice run-up with strong IPOs from SeaWorld and others. Keep an eye on shares of Blackstone and be sure to check back on SeaWorld once share prices for the offering are announced.