The Ardent Leisure Group Ltd (ASX: ALG) share price surged today, despite many ASX tourism shares descending.
The company's shares soared 8.49% in earlier trade before retreating. At the closing bell, the Ardent Leisure share price finished up 6.18% at $1.38.
Ardent's shares took off on a day many ASX tourism shares were in the red. The Corporate Travel Management Ltd (ASX: CTD) share price slid 2.54%, while Helloworld Travel Ltd (ASX: HLO) descended 2.4%.
Meanwhile, Qantas Airways Limited (ASX: QAN) dropped 1.96%, Webjet Limited (ASX: WEB) fell 2.86% and Flight Centre Travel Group Ltd (ASX: FLT) slipped 2.74%.
Let's take a look at why this ASX tourism share performed so well today.
What's happening with this ASX tourism share?
Ardent Leisure has agreed to sell 100% of its US Main Event Entertainment business for US$835 million.
The company, along with RedBird Capital partners, has entered a binding agreement and merger plan with Dave & Buster's Entertainment Inc (NASDAQ: PLAY). New York-based private investment firm Redbird acquired a 24.2% interest in Main Event Entertainment in June 2020.
If the transaction goes ahead, Ardent Leisure will receive about US$487 million in cash. Ardent plans to now focus entirely on its Australian theme parks business. Ardent owns the Dreamworld and WhiteWater World theme parks on the Gold Coast, along with the SkyPoint attraction.
Proceeds from the sale will be used to pay its debt to the Queensland Treasury Corporation and deferred settlement to the Australian Taxation Office.
Ardent will also use the funds to invest in the theme parks business. The company expects to return $430 million, or 90 cents per share, to shareholders if the deal goes ahead.
Shareholders will vote on this transaction at an extraordinary general meeting later this year.
The Ardent board will recommend shareholders vote in favour of the sell-off. This is subject to conditions, including independent expert review and no superior proposal being received.
Commenting on the news that boosted this ASX tourism share today, Ardent Leisure chairman Dr Gary Weiss said:
Having regard to the valuation reflected by the transaction and its terms and conditions, the Board believes that this transaction with Dave & Buster's is in the best interests of Ardent Leisure shareholders.
Furthermore, if the transaction completes, Ardent Leisure shareholders will receive a significant distribution of cash and retain continued ownership in a leading theme parks operator with a strong balance sheet and highly experienced management team that is poised to benefit from the significant investments made in the business and the reopening of Australia's economy and its international borders.
Ardent Leisure share price snapshot
The Ardent Leisure share price has soared 50% in the past year, while it is up 2% this year to date. In contrast, the S&P/ASX 200 Index (ASX: XJO) has returned nearly 8% in the past year.
Ardent has a market capitalisation of about $662 billion based on its current share price.
