Helsinki - Walt Disney boosted its holding in its
loss-making Paris theme park to 85.7 percent by acquiring a stake from Saudi
Prince Alwaleed Bin Talal, and offered to acquire the rest as it seeks to
revive the resort’s popularity.
Disney is acquiring a 9 percent stake in Euro Disney SCA
from Alwaleed’s Kingdom Holding for 2 euros ($2.13) a share, payable in Disney
stock. It’s offering 2 euros in cash apiece for the rest, according to a
statement Friday. That’s 67 percent more than Euro Disney’s closing price
Thursday.
Chief Executive Officer Bob Iger is doubling down on the
troubled resort, which has already been bailed out by Disney more than once.
Hurt by sputtering European economies in recent years, the park’s finances were
further hit by the 2015 Paris terrorist attacks and challenging business
conditions that continued through 2016, Burbank, California-based Disney
said.
Disney said it will support Euro Disney’s
recapitalization of as much as 1.5 billion euros. That follows a 2014 rescue
package, when the resort was pledged at least 1 billion euros over 10 years to
add attractions and spruce up grounds.
The new plan “affords maximum flexibility to
shareholders, addresses the group’s financial needs and reflects its ongoing
support for the long-term success of Disneyland Paris,” Disney said.
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Shares of Euro Disney jumped 65 percent to 1.98 euros at
9:27 a.m. in Paris, giving the company a market value of 1.55 billion euros.
Disney added 0.5 percent to $109.49 in New York on Thursday for a market value
of $173 billion.
This week, Disney reported a 13 percent gain in
theme-park profit to $1.11 billion, buoyed by higher spending at the domestic
and international parks, including a Shanghai resort, which opened in June.
Profit at the theme-park division topped earnings from businesses such as the
cable TV unit, home to ESPN and the Disney Channel, and its film arm.
The Paris resort’s history includes several financing manoeuvres
as it has struggled to match the popularity of Disney’s US theme parks. In
2012, Euro Disney consolidated debt from a number of banks into a loan from the
Disney company. Prince Alwaleed bought a 10 percent stake in Euro Disney in
a refinancing in 1994, two years after its opening.
Euro Disney’s board has expressed its support for
Disney’s plan. The board’s audit committee, comprised of independent members,
is recommending an expert to deliver a fairness opinion about the offer.