BUSINESS

'The End Of Something Extraordinary': Cirque Du Soleil Awaits New Owners

04/16/2015 11:44 EDT | Updated 06/16/2015 05:59 EDT
MONTREAL - Emotions are running high at Cirque du Soleil as the company is preparing to announce the sale of the famed Quebec circus troupe on Monday even though co-founder Guy Laliberte has yet to fully sign off on the transaction.

Employees are sad because an era in one of Quebec's creative success stories seems to be on the verge of change, said a former senior official who remains close to old colleagues.

"I'm very emotional because it's the end of something extraordinary," said the source, who didn't want to be identified by name.

Laliberte told workers on Wednesday that he had not yet concluded a sale agreement, which reports say would be for something under $2 billion.

"To be perfectly honest, there are a lot of discussions taking place at the moment," Laliberte wrote in a short email. "However, and as I usually do, be sure that you will be the first informed if I conclude an agreement with new partners."

Sources close to the deal say U.S. private equity firm TPG Capital is close to completing a deal that involves Quebec pension fund manager the Caisse de depot and a large Chinese investment fund.

Laliberte would reportedly continue to hold 10 per cent of the company after the sale and the Caisse another 10 per cent, with TPG holding 60 per cent and China's Fosun Capital the remaining 20 per cent.

The new owners plan to maintain the Cirque's headquarters in Montreal and would expand its global operations by opening a support office in Shanghai, where Fosun is based.

"Any transaction would involve both the management and creative soul of the company remaining in Montreal," said a source close to the deal. "TPG very much appreciates the unique cultural heritage of the Cirque and will be very much committed to the Montreal and Quebec creative communities."

While the Cirque has expanded in China, there's room for a greater presence in Asia because of demand for more live entertainment productions, he added.

"There will obviously be increased operations there, but by no means is this meant to be a headquarters in Shanghai. It would simply be a base of support for the Cirque's continued operations in China."

TPG is the world's largest casino owner with a stake in Caesar's Entertainment, while Fosun owns Club Med resorts.

While the Quebec government has said it wants the Cirque's head office to remain in the province in the event of a sale, Premier Philippe Couillard said Thursday in the legislature that it won't intervene in "a private transaction."

Former Caisse executive Michel Nadeau said the pension fund manager wouldn't heed any political pressure and would only make an investment if it make financial sense.

He said TPG, with $80 billion of assets under management in some 300 companies, is a very good manager.

"When you have these type of guys in the driver's seat, it's good for the Caisse," he said in an interview.

The purchase price is reportedly less than what Laliberte was seeking. But after a 30-year run, it's natural for a billionaire entrepreneur to sell his company as the product matures, competition increases and the public reacts more slowly to the offering, said Nadeau, who now heads Quebec's Institute for Governance of Private and Public Organizations.

He said Laliberte missed out on a bigger deal by not properly preparing his succession and keeping the company so closely tied to one person. That left him forced to sell to a majority owner, rather than take the company public.

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