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Blackstone Group offers to sell its half of Universal Orlando to NBCUniversal

NBCUniversal, which was acquired in January by Comcast Corp., has until June 12 to decide whether to buy out the resort's co-owner. The asking price was not disclosed.

March 16, 2011|By Jason Garcia and Jeff Weiner

Reporting from Orlando, Fla. — — Private equity firm Blackstone Group is looking to unload its stake in Universal Orlando, triggering a chain of events that could put the entire resort — which is in the midst of its most impressive financial run ever — on the auction block.

Blackstone has offered to sell its half of the resort to co-owner NBCUniversal, the media and entertainment conglomerate that was acquired in January by Comcast Corp.

NBCUniversal has until June 12 to accept the offer and buy out the private equity firm. If NBCUniversal turns Blackstone down, it would trigger a provision allowing Blackstone to seek an outside bidder to buy the entire resort.

A sale could have huge implications for Universal Orlando. Some of the resort's most important licensing contracts, including its agreement with Warner Bros. for the rights to Harry Potter, include provisions in which Universal Orlando could lose those rights if it was acquired by a new owner.

The resort could even lose the right to the name "Universal," although any sale would almost certainly happen only if the new buyer had assurances that it would maintain the rights to intellectual properties such as Potter.

A spokeswoman for Blackstone declined to comment. A spokeswoman for NBCUniversal said the company was studying the proposal and considering its options.

"We have been notified by Blackstone that they are triggering their buy-sell option, and we are evaluating our options as well," said John Demming, a spokesman for Philadelphia-based Comcast, which in January took control of NBCUniversal from General Electric Co. in a deal valued at roughly $13 billion.

To compel NBCUniversal to participate in a sale to a third party, Blackstone would have to solicit an offer worth at least 90% of the value of both parties' interests in Universal Orlando as implied by the private equity firm's asking price for its half. Put another way, the outside offer would have to be worth at least 180% of the price Blackstone has asked for its 50% stake from NBCUniversal.

Blackstone's asking price wasn't disclosed.

Blackstone's offer to sell comes with Universal Orlando in the midst of the strongest financial run in its history. The two-park resort reported record attendance, revenue and profit during the second half of 2010, after the mid-June opening of the popular Wizarding World of Harry Potter in its Islands of Adventure theme park.

Universal Orlando drew 11.2 million visitors in 2010, up 20.3% from the previous year. The resort's 2011 attendance is up 50% so far this year, the resort disclosed this week, as Wizarding World continues to lure crowds.

For Blackstone, Universal Orlando's surging financial performance could serve as an opportune moment to cash out. The New York firm, which paid $275 million to buy its stake in Universal from Rank Group in 2000, has co-owned the resort for nearly 11 years, longer than it typically holds on to such investments.

Blackstone has recently ramped up its theme park holdings, paying about $2.5 billion in late 2009 to buy SeaWorld Parks & Entertainment, which runs SeaWorld San Diego, SeaWorld Orlando, Busch Gardens and other parks around the country. Blackstone also owns a majority stake in Merlin Entertainments Group, which owns Legoland in Carlsbad, Calif.

Garcia and Weiner write for the Orlando Sentinel/McClatchy.

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