- Ardent Leisure (ALG) has announced U.S. investor, RedBird Capital Partners, will invest US$80 million (roughly A$117.4 million) into Main Event Entertainment
- Main Event is Ardent’s subsidiary, which has 44 family entertainment locations across the U.S.
- As Main Event suffered closures and losses due to COVID-19, this investment will provide financial flexibility and support
- RedBird has also been granted an option to acquire a further 26.8 per cent in Main Event, which is exercisable between July 2022 and 2024
- Company shares are up 11.2 per cent and are trading for 54.5 cents each
Ardent Leisure (ALG) has announced that U.S.-based private investment firm, RedBird Capital Partners, will invest US$80 million (roughly A$117.4 million) into Ardent’s U.S. subsidiary.
Ardent’s subsidiary holds a 100 per cent interest in Main Event Entertainment and RedBird’s investment into Main Event will see it gain a 24.2 per cent preferred equity interest.
This values Main Event at an implied enterprise value (EV) of US$424 million (approximately A$622.2 million).
Significantly, dividing Main Event’s enterprise value by its earnings before interest, tax, depreciation and amortisation (EV/EBITDA) gives the company an enterprise multiple of eight, based on 2019’s adjusted EBITDA.
Broadly, an EV/EBITDA multiple below ten is considered a healthy statistic for any company. On the S&P 500, a company’s enterprise multiple generally falls between 11 and 14.
Under this transaction, RedBird has been granted an option to acquire a further 26.8 per cent interest in Main Event from Ardent Leisure. This option is exercisable from between July 2022 and July 2024.
The valuation of the additional interest will be determined at a future date, based on Normalised Pro Forma EBITDA at that time and subject to a minimum equity floor price.
Main Event Entertainment is an entertainment business with 44 locations across the U.S. The subsidiary hosts birthday parties, bowling, arcade games and more for family and friends to enjoy.
COVID-19 led to all locations temporarily closing however the company is finding its feet once again with 28 out of 44 locations recently opened.
This transaction provides Main Event with the financial support and flexibility to adapt to the current challenging environment.
“We are confident Redbird’s strategic contributions will further support our continued efforts to be the premier family and social entertainment brand in the United States,” Main Event CEO Chris Morris said.
“We are excited by this new partnership with RedBird which not only reinforces Main Event’s financial strength and liquidity, but also provides a value-added strategic partner who can help drive the company’s growth and expansion plans in the United States,” Ardent Leisure Chairman Dr Gary Weiss said.
The initial board will comprise of Main Event CEO Chris Morris, Ardent Leisure directors Gary Weiss and Brad Richmond, as well as RedBird Partners Andrew Lauck and Dan Swift.
“RedBird’s focus on building high-growth companies in sports and entertainment and expertise in delivering premier content to consumers will be highly complementary to the Main Event platform as it looks to expand throughout the country,” RedBird Managing Partner Gerry Cardinale said.
Company shares are up 11.2 per cent and are trading for 54.5 cents each at 11:07 am AEST.