(Bloomberg) -- China Tourism Group Corp. is considering a potential deal to gain control of some of the country’s most iconic theme parks run by Haichang Ocean Park Holdings Ltd., according to people familiar with the matter.
The state-backed tourism company has held discussions with the Hong Kong-listed park operator about a potential transaction, the people said, asking not to be identified as the talks are private. It has been studying various possibilities including buying a stake in Haichang from its controlling shareholder, making a take-private offer or acquiring individual theme parks, the people said.
China Tourism Group has been conducting early due diligence on the company’s assets, the people said. Considerations are at an early stage and may not lead to any transaction, they said.
China Tourism Group and Haichang didn’t immediately respond to requests seeking comment.
Shares of Haichang have fallen 19% this year, giving the company a market value of $804 million. The stock is trading at more than 80% below its peak reached in July 2022 when China gradually eased Covid restrictions.
While domestic tourism has become more popular this year than the pre-pandemic period, tourists appear to be more cautious to open their wallets during their trips. In the Golden Week holiday earlier this month, travelers made 10.2% more trips than in 2019 but per-trip expenditure dropped 2.1% from five years earlier, according to Bloomberg calculations based on tourism ministry figures. Haichang has suffered net losses since the pandemic, even if sales more than doubled last year and are expected to grow in 2024.
Haichang operates seven theme parks in China including one in Shanghai that competes with Disneyland. Some of them run Ultraman-themed pavilions or hotels. The parks drew about 4.6 million visitors in the first half of this year, a 21% increase from the same period a year ago, its latest interim report shows. The Dalian-based company is also looking to expand overseas with plans to open a theme park in Saudi Arabia by 2030.
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