Is SeaWorld's proposed IPO a good deal for shareholders?

SeaWorld Entertainment, the amusement park behind Shamu the killer whale and countless childhood sunburns, announced this week that it will try for a $540 million IPO — which would make it one of the five biggest offerings in the U.S. this year.

The IPO news follows reports that SeaWorld's owner, Blackstone, "has tried and failed to find an acquirer for the aquatic-themed amusement park operator in recent months," says Britain's Financial Times. Indeed, the SeaWorld IPO falls in line with a growing trend in which "private equity groups have sought to take advantage of a rally on U.S. stock markets by listing companies that have struggled to find buyers on the private market."

SeaWorld plans to sell 20 million shares at $24 to $27 apiece, the midpoint of which would value the company at $2.4 billion. Ten million shares will come from SeaWorld, with the other half coming from Blackstone, which will still retain 70.5 percent of the company's stock.

Subscribe to The Week

Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.

SUBSCRIBE & SAVE

Sign up for The Week's Free Newsletters

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

From our morning news briefing to a weekly Good News Newsletter, get the best of The Week delivered directly to your inbox.

Sign up

To sweeten the deal, there's also an underwriters option that could tack on an additional 3 million publicly offered shares, potentially bumping the IPO up to $621 million, says Fox Business. What would SeaWorld do with all that cash? Settle debt, pay Blackstone a one-time fee, and use it for the rather vague-sounding "general business purposes," says FT.

Some analysts are skeptical of claims that this is a smart investment opportunity for buyers, warning that the stock may be overpriced. "The stock will fetch a hefty multiple," says Forbes, noting that $25.50 a share is still 27 times trailing earnings. Compare that to competitors like Six Flags, which trades at just 12.1 times trailing earnings, and Carnival Corp at 17.9 times, and SeaWorld's IPO suddenly doesn't sound like such a bargain.

That said, SeaWorld — which makes the bulk of its money from ticket sales, merchandise, and licensing — does seem to be heading in the right direction. Blackstone bought it from Anheuser-Busch InBev in late 2009 for $2.3 billion. They've gone from a $45 million loss of net income in 2010 to a $19.1 million profit in 2011 to a $77.4 million profit in 2012.