Britain’s biggest holiday parks operator has slammed the brakes on a £1.6bn sale amid growing concerns about the near-term prospects for the UK economy.
Sky News has learnt that Parkdean Resorts has called off talks with prospective buyers after an auction lasting more than six months.
The decision by Parkdean and Onex Corporation, its Canadian owner, provides one of the first signals that anxiety about a UK recession and its implications for consumer spending is feeding through into corporate transactions.
Inflation data and the cost-of-living crisis are forcing many boards to reconsider spending and growth plans for the next 12 months.
Although the market for taking companies public in London has been slow throughout 2022, mergers and acquisitions activity has broadly held up.
However, increasingly difficult debt financing conditions have cast doubt over a slate of potential deals, including auctions of Boots, Motor Fuel Group and Butlin’s.
Some or all of those sale processes may yet be successfully completed.
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The postponement of Parkdean’s sale comes despite a record financial performance in 2021, as staycation-focused leisure groups enjoyed a pandemic sales bonanza.
Last month, Sky News revealed that PAI Partners and TPG, two of the remaining bidders for Parkdean, had joined forces with a view to paying in the region of £1.6bn for the company.
The auction had previously drawn interest from other financial investors, including Apollo Global Management.
In a statement issued to Sky News, a Parkdean spokesman said: “The staycation market remains very buoyant, the business is trading strongly and is well positioned for growth, having invested £110m into the business over the past six months, expanding the trading footprint, acquiring new land to develop, upgrading accommodation, and enhancing park facilities.
“Given the current broader macro economic uncertainty, the board has decided to pause the process and will revisit when the macro economic backdrop has improved.”
It was unclear on Thursday when the process would be revived, although the degree of uncertainty engulfing the economy suggests that it could be subject to a protracted delay.
Onex bought Parkdean in late 2016 for £1.3bn, and has seen its more than 60 parks operating at near-full capacity this year, according to insiders.
The sector as a whole has benefited from a post-COVID bounceback in sales, prompting a string of corporate takeovers in the sector.
Morgan Stanley has been running the Parkdean sale process.
During the last year, Park Holidays has been bought by Sun Communities of the US for nearly £1bn, while CVC Capital Partners snapped up rival Away Resorts.
Sun Communities also bought Park Leisure, a smaller operator, in a deal worth about £180m, while Butlin’s is now also on the market after Bourne Leisure, its parent, concluded that it was not core to its portfolio.
