NEW YORK -(Dow Jones)- For years Anheuser-Busch Co.'s (BUD) theme parks have been a good venue for marketing its Budweiser beer to millions of parched customers.
Belgian-based InBev NV (INB.BT) announced Thursday it plans to buy Anheuser- Busch for $47 billion, creating the first global beer company. The merger would combine InBev's sales in Western Europe, Latin America and Canada with Anheuser's dominant position in the U.S. market.
Anheuser's amusement parks, including popular SeaWorld and Busch Gardens parks, could be sold if InBev's bid is successful. In a conference call Thursday, InBev said it may sell some of Anheuser's non-core assets.
The theme parks aren't seen as a natural fit for Anheuser. But they're profitable and possibly attractive to private-equity players or other large entertainment companies, experts say.
"The parks perform quite well," said Christian Aaen, a principal at Economics Research Associates. He said a key trend in the theme-park business is the increasing role of private-equity groups, including Blackstone Group's (BX) 2005 acquisitions of European amusement park operator Merlin Entertainments and Legoland Parks.
Some analysts say that Anheuser's entertainment business, which operates about 10 theme parks, is hard to value. That business is a very small part of the company's overall profits and Anheuser has used it more as a way of promoting its image and brands.
InBev is known for keeping a tight rein on costs and running a lean business and so it could decide to sell the entertainment division, which isn't a part of the core beer operations.
Their theme parks serviced 22.3 million visitors in 2007, according to Economics Research Associates. And, the entertainment segment last year had gross sales of $1.3 billion, net income of $162.9 million. According to the company's annual report, the business contributed to 8% of net sales and 6% of net income in 2007.
Anheuser says it's the second-largest theme park operator in the U.S. and competes with Walt Disney Co. (DIS), Six Flags Inc. (SIX), Cedar Fair Entertainment Co. (FUN), and Universal Studios parks owned by General Electric Co. (GE)
In February, Dubai-based property developer Nakheel inked an agreement with Busch Entertainment to develop the Worlds of Discovery theme park on a project being constructed off the emirate's coast.
Although it's unclear exactly which of Anheuser's competitors might be interested in buying its theme parks if they're sold, some operators probably won't be on the short list.
"Six Flags is not a position to acquire anything right now. They are balance- sheet challenged and very, very highly levered," said David Miller, an analyst at SMH Capital.
Meanwhile, Cedar Fair is seen having its hands full after its acquisition of Paramount Parks in 2006 from CBS Corp. (CBS).
Some analysts say Anheuser's theme parks could even survive a merger given they generate healthy profits and good advertising for its products.
"If you go to any of their theme parks, there is always an Anheuser-Busch facility to go and drink their beers and learn about their brewery process," said B. Craig Hutson, an analyst at Gimme Credit. He said there is no evidence this drives incremental sales and lacks obvious synergies with its brewery operations.
"But, it helps create good will. I think they (would) be inclined to keep that business," he said.
- By Angela Pruitt, Dow Jones Newswires, 201-938-2269,angela.pruitt@ dowjones.com
Belgian-based InBev NV (INB.BT) announced Thursday it plans to buy Anheuser- Busch for $47 billion, creating the first global beer company. The merger would combine InBev's sales in Western Europe, Latin America and Canada with Anheuser's dominant position in the U.S. market.
Anheuser's amusement parks, including popular SeaWorld and Busch Gardens parks, could be sold if InBev's bid is successful. In a conference call Thursday, InBev said it may sell some of Anheuser's non-core assets.
The theme parks aren't seen as a natural fit for Anheuser. But they're profitable and possibly attractive to private-equity players or other large entertainment companies, experts say.
"The parks perform quite well," said Christian Aaen, a principal at Economics Research Associates. He said a key trend in the theme-park business is the increasing role of private-equity groups, including Blackstone Group's (BX) 2005 acquisitions of European amusement park operator Merlin Entertainments and Legoland Parks.
Some analysts say that Anheuser's entertainment business, which operates about 10 theme parks, is hard to value. That business is a very small part of the company's overall profits and Anheuser has used it more as a way of promoting its image and brands.
InBev is known for keeping a tight rein on costs and running a lean business and so it could decide to sell the entertainment division, which isn't a part of the core beer operations.
Their theme parks serviced 22.3 million visitors in 2007, according to Economics Research Associates. And, the entertainment segment last year had gross sales of $1.3 billion, net income of $162.9 million. According to the company's annual report, the business contributed to 8% of net sales and 6% of net income in 2007.
Anheuser says it's the second-largest theme park operator in the U.S. and competes with Walt Disney Co. (DIS), Six Flags Inc. (SIX), Cedar Fair Entertainment Co. (FUN), and Universal Studios parks owned by General Electric Co. (GE)
In February, Dubai-based property developer Nakheel inked an agreement with Busch Entertainment to develop the Worlds of Discovery theme park on a project being constructed off the emirate's coast.
Although it's unclear exactly which of Anheuser's competitors might be interested in buying its theme parks if they're sold, some operators probably won't be on the short list.
"Six Flags is not a position to acquire anything right now. They are balance- sheet challenged and very, very highly levered," said David Miller, an analyst at SMH Capital.
Meanwhile, Cedar Fair is seen having its hands full after its acquisition of Paramount Parks in 2006 from CBS Corp. (CBS).
Some analysts say Anheuser's theme parks could even survive a merger given they generate healthy profits and good advertising for its products.
"If you go to any of their theme parks, there is always an Anheuser-Busch facility to go and drink their beers and learn about their brewery process," said B. Craig Hutson, an analyst at Gimme Credit. He said there is no evidence this drives incremental sales and lacks obvious synergies with its brewery operations.
"But, it helps create good will. I think they (would) be inclined to keep that business," he said.
- By Angela Pruitt, Dow Jones Newswires, 201-938-2269,angela.pruitt@ dowjones.com