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InBev Deal Leaves Busch Gardens' Future Uncertain

Tribune file photo by CLIFF MCBRIDE

Orangutans are part of the Jungala exhibit Busch Gardens Tampa Bay opened in April.

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By Jacob Schneider

The Tampa Tribune

Published: July 14, 2008

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TAMPA - After decades of stable ownership, the popular theme parks Busch Gardens Tampa Bay and Adventure Island could soon be up for sale now that the board of Anheuser-Busch has agreed to be bought by a Belgian company.

After weeks of speculation, Belgian brewer InBev announced Monday that it had reached an agreement with Anheuser-Busch's board to acquire the venerable St. Louis-based company in a $52 billion deal.

The deal must be approved by InBev and Anheuser-Busch shareholders, as well as federal regulators. Anheuser-Busch Shareholders would receive $70 per share under the deal, which aims to create a global beer magnate, uniting American brands Budweiser and Michelob with European beer brands Stella Artois and Beck's, among others.

The pending transfer of ownership, however, means uncertainty for Busch-owned theme parks and their employees. Industry analysts think that InBev will sell off all Busch divisions that aren't directly tied to making and selling beer.

Indeed, in a statement Monday announcing the deal, InBev said that the deal will be partially financed by the "divestitures of non-core assets," which includes the theme park division Busch Entertainment Corp.

Busch Entertainment owns and operates two theme parks in Tampa, Busch Gardens Tampa Bay and Adventure Island, as well as two in Orlando, SeaWorld Florida and Aquatica. It owns and operates six other theme parks nationwide and last year launched a partnership to develop and operate four amusement parks in Dubai under one umbrella, Worlds of Discovery.

According to Lehman Bros., Busch Entertainment Corp. is worth $2.58 billion, or about 6 percent of Anheuser-Busch's total valuation.

Busch ranks among the top five theme park operators in the United States with 2007 attendance of 22.3 million, according to the Themed Entertainment Association. Busch Gardens Tampa Bay was the company's largest draw with an estimated 14.5 million visitors.

On Monday, Industry analysts continued to predict that a thin field of suitors would vie to buy Busch Entertainment. The reason: traditional domestic theme park operators are not positioned to buy new properties right now because of tight credit markets and limited access to new capital.

The most likely domestic companies to express an interest in the Busch parks, either as a whole or carved up and bought individually or in groups, include Six Flags and Cedar Fair, say analysts. Six Flags and Cedar Fair are two of the largest operators of theme parks in the United States with 24.9 million and 22.1 million visitors, respectively, in 2007.

"I don't think either Six Flags or Cedar Fair is in a position or has the money now to purchase those parks," said Paul Ruben, North American editor for Park World magazine.

More likely: Busch's profitable parks should draw interest from foreign operators such as Britain's Blackstone Group or Spain's Parques Reunidos. Both have acquired American properties in recent years, Ruben said.

Most likely the parks would be sold as a group because of shared themes, such as an emphasis on wildlife and animal husbandry found at Busch Gardens and SeaWorld. They could, though, be broken up along brand lines, analysts said.

"The natural split, if one must be made, would be to keep the Busch Gardens and water parks together," said John Gerner, an industry consultant with Leisure Business Advisors in Richmond, Va. "In this case, the SeaWorld parks may be sold separately, although there is synergy between all parks."

Busch Entertainment also owns several parks that are not connected to the dominant brands, and thus could be sold off individually. These include Sesame Place in Pennsylvania.

As eager as InBev may be to sell the theme parks, it may not be the best time to sell them because their value may be depressed, Gerner said. Though the takeover of Anheuser-Busch may be finalized quickly — as soon as November, according to a Monday Lehman Bros. report — the theme park industry is suffering from a downturn in attendance and revenue. The weak economy and consumers' tightened spending is affecting the industry.

"Should this indeed be a down year, as expected, it would be ideal to show a bounce-back in attendance before putting the parks up for sale," Gerner said. "This would comfort buyers that we are not in a multi-year crisis. We wouldn't really know this until more than a year from now when the summer 2009 peak season ends."

Gerner added that the Busch Gardens properties might also be spun off to form a new independent company through an initial public offering on Wall Street. Such a plan might ensure that the park's management and business focus remain intact. But interest in an IPO would be subject to the same economic and market pressures as an outright sale, experts note.

If the properties were to be acquired by a new owner, the fate of the current management could be more up in the air, though rank-and-file employees would most likely be retained. Both Gerner and Ruben agreed, though, that it would be wise for a new owner keep top management intact because of the track record of strong attendance and revenue during the past 30 years.

New owners "may decide to bring in their own top management, which in my mind would be a shame because the current management is doing such a good job," Ruben said.

Gerner said that attempting to increase productivity by reducing staff could impact the long-term popularity of the parks.

"In general, these parks have operated very well and it would really be best to leave management and staff in place," said Gerner. "To do otherwise could be financial suicide even if personnel changes look good on paper."

Jacob Schneider can be reached at (813) 259-7850 or jschneider@tampatrib.com.

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