Macquarie Leisure Trust Group has made its first move offshore with the purchase of Texas based entertainment group Main Event Entertainment for $US45 million, approximately $A59 million.
Main Event is one of the largest operators of indoor family entertainment centres in North America’s southwest with six established sites in Dallas, Fort Worth, Austin and Houston Texas plus two new sites, which are due to open in 2007.
The existing sites are held on a long term leasehold basis with an initial term of 20 years and two options of five years. It is anticipated the two new sites will be held on a freehold basis however, the business model provides the flexibility to complete a rollout of both freehold and leasehold sites. Typical returns on freehold sites are anticipated to be in the order of 20% EBITDA while leasehold returns are anticipated to be approximately 47%.
Macquarie Leisure’s chairman Neil Balnaves said Main Event is a strong strategic fit with the group and provides an exceptional growth platform into the US leisure and entertainment market.
“Macquarie Leisure’s existing expertise in Main Event’s core operations of bowling, food and beverage and amusement games makes it an excellent addition to the group’s portfolio,” he added.
Macquarie Leisure’s chief executive Greg Shaw said unlike previous Australian acquisitions where Macquarie Leisure had focused on underperforming businesses requiring significant operational restructuring, the Main Event business was appropriately resourced, exceptionally well managed and had developed a unique business model that could be replicated in future years.
“Main Event has fulfilled strict investment criteria for the Group’s US entry. It’s an established concept with a proven performance track record and a business that is well managed and resourced,” he added.
Shaw said following the acquisition of Main Event, MLE will consider the opportunity to expand nationally in the US and globally through franchise operations.
The transaction will be funded by a mix of equity and debt at settlement. Based upon market consensus and 100%, the transaction will deliver distribution accretion in the 2007 and 2008 financial years of 2% and 13% respectively. If the transaction is 100% debt funded, the transaction will deliver distribution accretion in the 2007 and 2008 financial years of 5% and 18% respectively.
By Kathryn O’Meara
