Why Doesn't KKR/Carlyle/PE Players Buy Lego?
Tiktok has helped maintain adult relevancy via collectors, Lego investors, and adult enthusiasts that didn't exist pre Reddit/Tiktok. However, growth opportunities probably limited no matter what Lego collab they come up with given ineslatic pricing for toys and reliance on licensing deals. Cash flows probably very consistent. Hard to buy cheap and would require immense purchase premium but the perfect candidate for an LBO. Thoughts?
Too high of a premium
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25% of LEGO is owned by a charitable group and 75% is still owned by the family. They really have no reason to sell and if they did it would be for too high of a premium for PE to justify — LEGO is a fantastic business though
I think this would be the case of buy a business at 100 and sell the business for 100 and still make a crazy IRR due to consistent cash flow/brand name recognition. You're right premium would be astronomical but money talks. Would love to see their true 10k and how they run the business. When you look at their financial summary on the website, it takes all of 5 seconds to see this is a holy grail business with cash. Immense margins. Consistent growth.
Definitely makes sense, but if it takes 5 seconds to realize how great of a business it is, wouldn't this already be priced into the multiple KKR or whoever would be forced to buy into? I mean I doubt the folks who own LEGO are unsophisticated enough to not be able to maximize their value, no?
It's a proud family owned business that is also the joy of Denmark. Reminds me of Hershey in some ways. Family not interested in selling...
Same vibes as chick fil a
Family not selling but ironically BX took Merlin private (Legoland parks operator), together with CPP and Kirkbi, which is the family's investment vehicle. Story of BX / Kirkbi / Merlin goes back and its very interesting
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