The entertainment group behind the London Dungeon and the Sea Life chain was snapped up for £102.5m yesterday.
Merlin Entertainments was bought by US private equity firm Blackstone, which is also bidding for the Legoland theme parks.
Merlin's attractions received more than six million visitors last year and the deal marks a major profit for seller Hermes Private Equity, which bought it for £72.5m just 15 months ago.
Poole-based Merlin runs a total of 28 attractions in Europe under the Sea Life, Dungeons, Seal Sanctuary and Earth Explorer brands. In the UK, it has three Dungeons, in London, York and Two of the UK's most prominent fund management groups flexed their muscles this week in a public display of virility. M&G's posturing on dividends and Hermes' on research may indicate overdeveloped corporate vanity glands, but are welcome catalysts to a debate nonetheless.
M&G has a rich history as a so-called value investor in the UK. Its policy of rooting out unfashionable companies with low valuations, and then holding them for the very long term, stood it in good stead for many years. Nevertheless, like many of the companies it held in its portfolios, M&G's investment style was always prone to go in and out of fashion with the cycles of the stock market.
There are two stages in a typical cycle in which value investing is tested - in a boom and in a recession. In tough times, dividend cuts can destroy a value stock. In boom times, dividend considerations are overrun by galloping profits, their valuation and hence share prices.
In the late 1990s M&G diversified its investment process, embracing growth alongside its traditional value approach. It was probably no coincidence that this was a period when an apparently miraculous economic recovery stretched well beyond its normal cycle.
Now, however, the "miracle" has been exposed. Economies have cooled. Growth stocks have popped. The stock market has crashed. And value stocks should be back in vogue. Instead, though, fears of outright recession have taken hold and, in many sectors, dividend cuts are on boardroom agendas.
Hence the topicality of M&G's public statement of its attitude towards dividends. Michael McLintock, the fund manager's chief executive, has written to all Britain's leading companies to state his firm's belief that dividends are likely to be of increasing significance in the coming years, and should not be cut lightly.
There can be little doubt that McLintock's basic premise is correct. In a low inflation environment, nominal profits growth will also be low, and so will overall returns from equities.
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