The deferral of Parkdean sale shows growing concern regarding the purchasing power of British consumers amid a period of deteriorating economic conditions.
The UK’s largest operator of holiday resorts has halted a £1.6 billion sale amid rising concerns about the economy’s near-term prospects.
The decision by Parkdean and its Canadian owner, Onex Corporation, is one of the first indications that concerns about a UK recession and its impact on consumer spending are influencing corporate transactions.
Inflation data and the cost-of-living crises are compelling many boards to reevaluate their spending and expansion plans for the coming year.
Although the London market for initial public offerings has been sluggish throughout 2022, merger and acquisition activity has mostly remained stable.
However, deteriorating debt financing conditions have placed doubt on a variety of potential transactions, including the auctions of Boots, Motor Fuel Group, and Butlin’s.
Some or all of these sales procedures may potentially be concluded successfully.
Despite a record financial performance in 2021, the sale of Parkdean has been postponed as staycation-focused leisure businesses enjoyed a global sales bonanza.
Sky News reported last month that PAI Partners and TPG, two of the remaining bidders for Parkdean, had teamed together to pay in the neighborhood £1.6 billion for the company.
Before the sale, several financial investors, notably Apollo Global Management, had expressed interest.
A spokesperson for Parkdean stated, “The staycation market remains very buoyant, the business is trading strongly and is well-positioned for growth, having invested £110 million in the business over the past six months, expanding the trading footprint, acquiring new land to develop, upgrading accommodation, and enhancing park facilities.
“Due to the current macroeconomic uncertainty, the board has decided to halt the procedure and resume it once the macroeconomic environment has improved,”
It was unclear on Thursday when the procedure will be resumed, but the level of economic uncertainty suggests that it may be subject to a lengthy delay.
According to sources, Onex’s purchase of Parkdean in late 2016 for £1.3 billion has resulted in its more than 60 parks functioning at nearly full capacity in 2018.
The sector as a whole has profited from post-COVID sales growth, resulting in a slew of mergers and acquisitions.
The Parkdean sale process has been led by Morgan Stanley.
Sun Communities of the United States acquired Park Holidays for over £1 billion in the past year, while CVC Capital Partners acquired rival Away Resorts.
Sun Communities also acquired Park Leisure, a smaller operator, in a transaction valued at approximately £180 million, and Butlin’s is currently on the market after Bourne Leisure, its parent company, determined that it was not an essential component of its portfolio.
