NBCU to buy out partner in Universal Orlando


NBCUniversal has a deal to purchase the 50% of Universal Orlando that it doesn’t already own from The Blackstone Group for $1.025 billion. Closing will come quickly, with NBCU expected to become the 100% owner of the theme park on July 1st.

NBCU had until June 12th to respond to Blackstone’s exercise of its right to offer its 50% to its partner, but the deal came together with several days to spare. Had NBCU declined to buy out Blackstone, then Blackstone would have been able to put the entire operation up for sale.

As noted in our previous story, Moody’s Investors Service said financing the transaction was unlikely to materially impact NBCU or its credit rating – and that free cash flow would allow it to de-lever back to under 3.0 times EBITDA in 12-18 months. Moody’s expects NBCU to refinance all of Universal Orlando’s debt at NBCU’s credit ratings, which will reduce interest costs. Indeed, NBCU said it will fund the acquisition with cash on hand, borrowings under its existing revolving credit facility and a one-year $400 million note to NBCU from a Comcast affiliate.

“The acquisition consolidates our ownership and confirms our long-term commitment to Universal Orlando and the theme park business. Universal Orlando is a consistent and significant driver of operating and free cash flow and is performing extremely well. It has a superb management team and exciting growth opportunities. This purchase of the Blackstone interest is attractively valued and represents strong financial returns for NBCUniversal,” said a statement from NBCU CEO Steve Burke.

At Blackstone, Senior Managing Director Michael Chae says the theme park has been a good investment. “We are proud of the extraordinary growth and success that Universal Orlando experienced during our eleven years of ownership. Throughout this period we have been committed to investing for long-term growth in partnership with the Company’s management and NBCUniversal, and we are gratified with the results of this strategy.”

According to the joint announcement, the total enterprise value of Universal Orlando is calculated at $3.165 billion for the transaction. The property consists of two theme parks – Universal Studios and Islands of Adventure – plus the Universal CityWalk shopping, dining and entertainment complex and three on-site hotels.

RBR-TVBR observation: Private equity investors don’t stay forever. In fact, 11 years is a pretty long run. We would have been shocked had NBCU decided to pass on buying the Blackstone stake and put the whole place up for sale.