Private equity investors TPG Capital and Fosun Captial Group are plotting a major Asian expansion for Cirque du Soleil once their proposed $1.5-billion takeover of the Montreal company receives regulatory approval.
"We at TPG have decades of experience in being on the ground ... helping Western brands such as Cirque succeed in the East and China specifically," Jim Coulter, TPG's San Francisco-based chief executive officer and co-founder, said in an interview. By joining forces with Fosun, China's largest fund manager, Mr. Coulter said "we're giving Cirque the best chance of success in that new market."
Cirque CEO Daniel Lamarre, who will continue to lead the company under its new owners, said China has been a priority for a while, but the circus production company stumbled a few years ago after it was forced to shutter a show in 2012 in Macau, a city that primarily draws gamblers. "No show has worked so far in Macau," he said.
Mr. Lamarre said Cirque is planning to launch its first China tour by the end of 2016, with its planned Avatar circus show, due to premiere Dec. 21 in Montreal. Both Fosun and TPG have ties with Cirque through subsidiaries that they plan to tap in Asia.
Fosun controls a number of global travel assets, including Club Med, which employs Cirque staff at a number of locations to teach guests acrobatic techniques. TPG owns a variety of television, film and entertainment ventures including Creative Artists Agency, which represents some of Cirque's top performers, as well as many Chinese artists through its Beijing office.
"This one is all about growth," TPG's Mr. Coulter said. "we now have a more coherent strategy for Asia."
Cirque draws most of its annual revenue of about $1-billion outside Canada. Mr. Lamarre said less than 10 per cent of the company's revenue is generated by shows in Canada, with the bulk coming from its suite of shows in Las Vegas. Cirque has long-term contracts with MGM Resorts International and he said there are no plans to change venues to hotels operated by Caesars Entertainment Corp, which is controlled by TPG.
Under terms of the planned takeover, TPG will be Cirque's largest shareholder with about a 60-per-cent stake and Fosun will rank second with 20 per cent. Pension fund manager Caisse de dépôt et placement du Québec agreed to acquire a 10-per-cent stake.
The Cirque's founder and controlling shareholder Guy Laliberté is keeping 10 per cent through his family trust.
Mr. Laliberté, a one-time flame breather who launched Cirque in 1984 as a travelling group of street performers, has agreed to remain with the company as a creative and strategic adviser during the transition.
Talking to reporters at the company's Montreal headquarters yesterday, he appeared relieved to be leaving the demands of a sprawling global company.
Dressed in a black shirt, jacket and pants, Mr. Laliberté said yielding control of Cirque at the age of 55 was liberating. "By doing this, I find myself having a real choice in my decisions," he said. "To go up or down or left or right. You have no idea how good that feeling is."
Initially, Mr. Laliberté planned to sell a minority stake in the company. But after potential buyers reviewed the private company's financial and operating data earlier this year, concerns about the risks of its high-cost productions drove most suitors away. TPG and Fosun were the only serious bidders remaining a few weeks ago, according to sources, and their offer was contingent on acquiring control.
Mr. Laliberté didn't fight the request after he came to the conclusion that four of his five children, aged 7 to 18, showed little interest in running the business while the other was too young. He said his oldest children have their own plans and dreams – and he wants to be there to support them while pursuing new ventures of his own.
"As a person, I truly don't believe in second generation entrepreneurship," Mr. Laliberté said. "[Having] them achieve their dream and not having to carry on the dream of their father, it's so precious. And this is the opportunity that I am giving them through this transaction."
As part of the deal, the investors have agreed to a package of binding commitments that ensure Montreal remains Cirque's decision-making and creative base. The commitments include keeping the headquarters in the city, continuing to support the growth of Cirque's core business while expanding job and training opportunities for Canadian-based employees, and a significant presence of Quebec and Canadian managers on the company's leadership team and board.
Quebec businessman Mitch Garber has agreed to buy a small stake in Cirque and will join the the company as chairman.