Walt Disney plans to take full ownership of its ailing theme park in Paris to get the resort under control after 25 years of ups and downs at its first and only outlet in Europe.
Disney is acquiring a 9 percent stake in Euro Disney SCA from Saudi Prince Alwaleed Bin Talal's Kingdom Holding Co. for 2 euros ($2.13) a share, payable in Disney stock. That will give it an 85.7 percent holding, and it's offering the same price in cash for the rest, according to a statement Friday. The offer is 67 percent higher 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.
During an earnings call, Disney revealed that the Avatar Land would open May 27 and Star Wars land will open in 2019.
During an earnings call, Disney revealed that the Avatar Land would open May 27 and Star Wars land will open in 2019.
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 maneuvers as it has struggled to match the popularity of Disney's U.S. 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.
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