Merlin building success as Legoland expands

The Company behind Legoland and Madame Tussauds attractions is preparing for a bold expansion into North America and Asia.

Merlin Entertainment, which operates The York Dungeon and Sealife Centre Scarborough as part of its 29-site portfolio in the UK, is set to open Legoland parks in Japan, Dubai and Korea by 2017.

Around 90 million Lego blocks will be used in creating the worlds.

The theme parks, which each house 30 million Lego bricks and offer youngsters rides and shows, make up 30 percent of Merlin’s £1.2bn revenue and are a big part of its expansion plans.

Lego, the world’s biggest toy brand, is big business in the United States. In China, demand for Western brands from a growing middle class is creating opportunities.

The world’s second largest operator of visitor attractions behind Disney, Merlin serves some 60 million people a year. It sees scope to extend its nine Legolands to 20, and its raft of short-stay sites such as Madame Tussauds, Dungeons and Sea Life Centres to over 100 globally.

“North America, which is Lego’s biggest market, has got the opportunity for us to have three more Legoland Parks,” said Merlin boss Nick Varney, whose firm holds the exclusive license to operate the Lego brand from Kirkbi, its major shareholder.

“We also think China has the opportunity to take three to five and we’re looking at preliminary sites in both countries.”

Investors see growth potential. At 374 pence at market close on Monday, Merlin shares are 20 per cent above the price at which they listed at on the London stock exchange in November 2013.

Jefferies analyst Mark Irvine-Fortescue said the group had strong prospects, reiterating a buy rating.

“The company is well placed to capitalise on attractive industry trends including growth in leisure spend, expansion of the middle class in emerging markets, increase in international tourism, and growth of the short-break market,” he said.

After Korea the next Legoland will open in the United States or China in 2019 or 2020, Varney said.

“China is going theme park crazy at the moment,” Mr Varney said, noting that both Disneyland and Universal Studios were opening resorts in Shanghai and Beijing respectively.