Disney considers buyout of Disneyland Paris
Aug 27, 2012
It may not be widely known, other than by the biggest fans, but the Walt Disney Co. does not own Disneyland Paris, though this may soon be changing. The park is managed by a publicly traded French company, Euro Disney SCA; Disney owns 40% of this company. There are rumors that Disney may be considering buying out the rest of the remaining stock, which is held by individual investors (10% is owned by a Saudi prince). The market price for the non-Disney portion is about $120 million.
Disneyland Paris is a popular tourist destination in Europe and draws 15 million visitors a year, but has long had problems with their finances and has even been financially restructured twice. It opened in 1992 and has had annual net losses 12 times since then. According to TIME.com, Disney should have been receiving royalties and management fees from the park, but because of the poor financial performance, these fees have been nonexistent much of the time.
While not specifically commenting on the buyout, Disney released a statement saying, "We're encouraged by the resort's continued financial resilience and remain deeply committed to the future growth and long-term success of this invaluable asset to the Walt Disney Co."
If the economy and attendance trends remain favorable, Disneyland Paris should have paid down about one-quarter of their debt in the next six years. The resort is seeing better cash flow and is making an operating profit. On-property hotels were at 87% capacity last year, which is certainly looking up.
Stockholders would likely approve of the buyout, if only as a way to recoup some of their money. According to TIME.com, "When the company first went public in 1989, it traded at 13.50 and hit a peak of 30 when Disneyland Paris opened in 1992. Today it is trading at just over 5." Disneyland Paris currently has two parks, but has the room to add a third by 2030, according to an agreement with the French state. If bought out and the debt paid off, the new park could be added, as well as more attractions at the existing parks.