Chinese firm buys SeaWorld stake

ORLANDO — Investment firm Blackstone Group has sold its 21 percent stake in SeaWorld to a Chinese company.

The deal with Zhonghong Group gives SeaWorld a path into the growing Chinese tourism market and a partner with experience in theme-park development there.

Zhonghong Group will buy the stock at $23 per share, Orlando-based SeaWorld Entertainment Inc. said Friday. The stock had closed at $17.31 Thursday and rose before Friday’s opening bell to $19.69. Zhonghong is paying a 33 percent premium on Thursday’s closing price, but the deal includes licensing and consulting deals for theme-park development in China. Two Zhonghong executives will join SeaWorld’s board.

The company's shares closed Friday at $18.13, up 82 cents, or 4.7 percent.

“SeaWorld’s future is brighter than it was two days ago,” said Dennis Spiegel, president of the International Theme Park Services trade group. “You already have Disney in China as well as Universal; now you have SeaWorld.”

SeaWorld CEO Joel Manby said in a news release, “Zhonghong Group has a strong track record of performance in the leisure and travel industries, and a solid management team with valuable experience in theme parks, family entertainment, and real estate development in Asia.”

The deal should close in the second quarter of this year. Reuters calculated the deal was worth about $429 million.

Blackstone bought SeaWorld in 2009, just a few months before an orca killed trainer Dawn Brancheau at the company’s Orlando theme park. That set in motion a chain of events that included the 2013 documentary “Blackfish,” which brought arguments against killer whale captivity into the mainstream. 

SeaWorld, which Blackstone took public in 2013, has since suffered from declining attendance and revenue, much of it stemming from controversy over its orcas.

China, the world’s most populous country and second-largest economy, has been a popular target for theme-park companies in recent years. Disneyland Shanghai opened in June and Universal is working on a park near Beijing in partnership with several state-owned companies. More than 100 theme park-projects are in the works in China backed by both Chinese and foreign investors, Spiegel said.

China has 39 marine mammal parks, including massive attractions such as the Chimelong Ocean Kingdom near Hong Kong, according to a Washington Post report.

It’s unclear whether killer whales and other marine mammals could be a part of an expansion into China, but Spiegel said animal welfare isn’t a mainstream issue yet with Chinese consumers. 

“The baggage that comes with the PETA and the animal activists really hasn’t really rooted in China,” he said.

Zhonghong’s other theme-park developments include the Monkey Kingdom theme park being built outside Beijing. Monkey Kingdom is based on a 16th-century Chinese novel “Journey to the West” and is expected to include roller coasters and boat rides.

Hailed as a “Disney-quality” concept, Monkey Kingdom was supposed to open in 2014 on 100 acres at a cost of $1.5 billion under Zhonghong’s real estate arm.

Zhonghong’s deal says that SeaWorld will “advise on the concept development and design of theme parks, water parks, and family entertainment centers to be developed and operated by Zhonghong Holding, including exclusive rights in China, Taiwan, Hong Kong and Macau.”

“China has invested enormously in its leisure industries in recent years and this gives Zhonghong both a partner with deep knowledge in the business and access to SeaWorld’s well-known brands,” theme-park analyst Bob Boyd of Pacific Management Group said in an email.

Theme parks in China are part of a growing global strategy for SeaWorld. In December the company announced that it was partnering on a new theme park in the United Arab Emirates with no killer whales. That park is slated to open by 2022.

Friday’s agreement contains restrictions on Zhonghong’s ability to sell its interest in SeaWorld for two years. It also cannot acquire more than 24.9 percent of SeaWorld’s outstanding shares without the approval of the independent directors of SeaWorld’s board.

Following the closing, Blackstone and its affiliates will no longer hold any interests in SeaWorld or have seats on its board of directors.

Blackstone used to hold a stake in Universal Orlando.

One of SeaWorld’s two new board members is theme park and entertainment veteran Yoshikazu Maruyama, the head of Zhonghong’s American operations and a former executive at DreamWorks and Universal.

The other new board member is Yongli Wang, Zhonghong’s chief strategy officer who has held several spots in the international banking and finance industry.