Hedge fund urges Madame Tussauds operator to go private

A large investor in the operator of Madame Tussauds is waxing nostalgic about the company’s days as a private entity.

Activist hedge fund ValueAct is urging the company behind the maker of Meghan Markle and Ariana Grande wax figurines to pursue a deal to take itself private, saying a going-private transaction would result in a premium of 30% to current stock price.

“Simply put: Merlin has struggled as a public company,” ValueAct said of Merlin Entertainments, the world’s second-biggest visitors’ attractions group next to Disney.

In addition to Madame Tussauds, Merlin operates the London Eye ferris wheel, Legoland theme parks and Peppa Pig-themed parks through a partnership with Entertainment One. It got the letter in the midst of plans to spend big money on its parks and other attractions, including adding hotels to its theme parks in a bid to make them more like resorts.

According to ValueAct, which invested in Merlin in 2017 and holds 9.3% of shares, the company’s spending plans will only work if the company takes itself private because public shareholders lack the patience to wait for a payoff.

As proof, ValueAct noted that the authority on wax figures of Hollywood and Buckingham Palace royalty has seen its shares fall 2.7% since its 2013 debut on the London Stock Exchange.

“Private ownership is simply better placed than current public shareholders to underwrite the investments Merlin must make,” ValueAct president Mason Morfitt said in a letter to Merlin’s board.

“The board remains fully confident in the ongoing execution of Merlin’s strategy,” the company said.