Cirque du Soleil selling majority stake to investor TPG
Montreal-based Cirque du Soleil has confirmed it is selling a majority stake in the entertainment company to an investment group led by global investment firm TPG.
"This is certainly not a low point for Cirque," said new chairman Mitch Garber.
Minority stakes go to Shanghai-based Fosun Capital Group and Quebec's Caisse de Depot.
Cirque du Soleil founder Guy Laliberté emphasized the new partnership would focus on growing, and not shrinking, the company he founded.
Rumours of the sale have been swirling around the entertainment and business communities for several weeks.
The international headquarters of Cirque du Soleil will remain in Montreal.
Laliberté will maintain a stake in the business, and he will continue to provide strategic and creative input.
He said he will play an active role in the transition phase.
'Not a fire sale'
Laliberté acknowledged Cirque has struggled with financial difficulties, but he was careful to add that "this is not a fire sale."
He said his decision to sell the majority stake comes from wanting to spend more time with his five children. He has confidence that Cirque's values, culture and Quebec roots will be protected.
"The Quebec flag will still be there, the Canadian flag will still be there, the Cirque flag will still be there," he said.
Montreal Mayor Denis Coderre said he's confident Montreal will continue to be at the centre of Cirque du Soleil.
"Cirque du Soleil is an important business brand for Montreal and for Quebec...I had a few conversations. I was reassured that it will stay in Montreal," Coderre said.
Transaction to be final in summer 2015
TPG is a global private investment firm with more than $67 billion in assets. It has offices around the world, including in Toronto.
The company has helped develop well-known brands such as J.Crew, Ducati and Neiman Marcus.
Quebec's pension fund manager, the Caisse de dépôt et placement, is also acquiring a minority interest in Cirque du Soleil.
Financial terms of the deal were not disclosed, though some estimates put the deal at between $1.5 and $2 billion.
The transaction is subject to customary closing conditions. It's expected to close in the third quarter of 2015.
Concordia professor Patrick Leroux said the deal provides Cirque with fresh capital, as well as new opportunities.
"Fosun is a player in the Chinese market and until now they haven't been able to expand in China in the way they would like to," he said.
"They're also going to have new capital coming for exploring new ventures and ways of conceiving the experience – you don't just go see a show, you go experience something," he said.
But University of Montreal business school professor Louis Hebert warns that there may be restructuring ahead for the Cirque.
"Private equity groups, typically they don't want to be managing an association for a long time," he said, adding "I'm not sure it will ever be Canadian again."
Very often investors will want to sell again in a few years or even list the property so they can make their profit, Hebert said.
