Merlin Entertainments PLC (LON:MERL) shares received a boost on Monday after a US activist investor became the third largest shareholder in the themepark operator.
ValueAct, which pushed for management changes at Rolls-Royce Holdings PLC (LON:RR.) and Microsoft Corp (NASDAQ:MSFT), has revealed a 5.4% stake in the owner of Legoland and Alton Towers.
Merlin downgraded its full year profit forecasts in October after terror attacks in the UK had an impact on the number of visitors to its attractions, which also include Madame Tussauds and the London Eye.
READ: Terror attacks deterring visitors to London warns Merlin Entertainments
ValueAct thinks market concerns on Merlin overdone
However, ValueAct is understood to be supportive of Merlin’s strategy after the two companies met, a source told the Daily Telegraph.
The source said ValueAct thinks concerns about the company are overdone, adding that it was “quite a different situation” to Rolls-Royce.
ValueAct secured a seat on the board of Rolls-Royce in 2016 in order to push through changes it thought were needed to be made at the engineer.
It had also gained a seat on the board of Microsoft in 2013 and used its position to press for the ousting of the then-chief executive Steve Ballmer.
Merlin not worried about ValueAct investment
Merlin’s management is said to be “not alarmed” by ValueAct becoming one of its main shareholders, a person familiar with the situation told the Financial Times.
In a statement, Merlin said: “We maintain strong relationships with all of our major shareholders. As a matter of course we do not comment on specific investor dialogue.”
Merlin’s main shareholder is Kirkbi, the investment company of the family behind Lego, with a 29.8% holding.
Merlin to report full year results next week
Merlin is due to report its 2017 fiscal year results on March 1 and Deutsche Bank expects underlying earnings (EBITDA) of £475mln on revenue of £1.6bn.
“After the 3Q17 update, we cut our EBITDA estimates by 4%, 8% and 8% for FY17E, FY18E and FY19E. Much of the 3Q17 negative commentary focused on one-off events (terror, weather),” the bank said.
In the year to December 31, 2016, Merlin reported a 1.8% decline in EBITDA to £433mln and a 1.4% like-for-like increase in revenue to £1.4bn.
Shares in Merlin rose 3.5% to 354p in afternoon deals.