Merlin Entertainments PLC (LON:MERL) ticked modestly higher on Monday, holding just above the level of last Friday’s agreed £4.8bn takeover offer from a consortium backed by the founding family of the Lego Group, as a number of brokers adjusted their ratings and target prices for the FTSE 250-listed firm.
KIRKBI AG, the investment vehicle of Lego’s founding Kirk Kristiansen family, and private equity giant Blackstone, together with the Canada Pension Plan Investment Board as a co-investor, offered 455p in cash per Merlin share. In late morning trading on Monday, the shares were 0.1% higher at 449.50p.
READ: Merlin Entertainments accepts takeover deal from Lego family and Blackstone
In a note to clients on Monday, Berenberg upgraded its rating for the Madame Tussauds owner to ‘hold’ from ‘sell’ after raising its target price to the offer level, up from 140p previously.
The German blue-chip broker said it thinks the company being taken private would be a good outcome for both current shareholders and management, which will be able to focus on improving underlying performance without the added scrutiny of being a public company.
However, Morgan Stanley downgraded its rating for Merlin to ‘equal-weight’ from ‘overweight’ while leaving its target price unchanged at 460p.
The US bank’s analysts said the backing of anchor shareholder KIRKBI would seem to limit the chance of a successful counter-bid for Merlin.
And RBC Capital cuts its stance on Merlin to ‘sector-perform’ from ‘outperform’ while raising its target price to 455p from 375p.
Liberum Capital also hiked its target price for Merlin to 455p, up from 360p previously, and reiterated a ‘hold’ rating on the stock.
In a note to clients, Liberum’s analysts said: “KIRKBI has always maintained a substantial holding in Merlin (29.6%), and along with irrevocable commitments from management and other large shareholders including ValueAct (9.3%), this deal looks almost certain to complete in Q4 2019.”
They added: “The announcement highlighted the significant long term investment required in the business being more suited to private ownership.”