SeaWorld Entertainment Inc. (NYSE: SEAS) shares jumped on Tuesday after the firm announced a series of share repurchases. Ultimately, this would lead to Hill Path Capital increasing its stake in SeaWorld. Could this renewed faith in SeaWorld signal a return to prominence?
It’s worth pointing out that, excluding Tuesday’s move, SeaWorld shares have outperformed the broad markets, with the stock up about 23% year to date. In the past 52 weeks, the stock is actually up about 57%.
According to the announcement, SeaWorld has agreed to acquire 5.6 million shares from an affiliate of Pacific Alliance Group. At the same time, Hill Path Capital has agreed to buy 13.2 million shares from Pacific Alliance Group, increasing its stake in SeaWorld to 34.5%.
Also as part of this deal, SeaWorld has agreed to appoint up to three Hill Path director designees to its board of directors.
In connection with Hill Path’s purchase of shares, it has agreed to certain customary standstill obligations, restrictions regarding the manner of sale of shares and equal treatment for any change in control transaction. Additionally, Hill Path agreed that shares held in excess of 24.9% generally would be voted consistent with the board’s recommendations or consistent with the shares voted by other shareholders.
Yoshikazu Maruyama, board chair of SeaWorld, commented:
The company’s decision to buy back shares underscores management and the Board’s belief in the company and its prospects and that SeaWorld is a highly attractive investment opportunity. The buyback also reinforces the company and the Board’s commitment to opportunistically use excess capital to return value to shareholders. Our improving financial and operating results over the past several quarters demonstrate that we are on the right track to deliver further value to shareholders.
Shares of SeaWorld were last seen up about 18% at $32.17, in a 52-week range of $17.52 to $32.55. The consensus price target is $32.82. The stock is among those seen as potentially huge summertime winners.