Village Roadshow mulls blockbuster $1b private equity takeover offer
Village Roadshow Limited has received a takeover offer worth almost $1 billion from private equity firm Pacific Equity Partners just weeks ahead of longstanding chief executive Graham Burke’s plan to retire from the family-run cinema and theme park business.
The $3.90-per-ordinary-share offer comes after a tumultuous year for the Kirby-family controlled company and ahead of theme parks division boss Clark Kirby taking the corporate reins in 2020.
Village Roadshow’s share price jumped 17.5 per cent to $3.76 by 3.40pm on the back of the news of the deal, taking the stock to its highest value since May. Shares in Village closed at $3.20 on Wednesday ahead of the announcement and the deal is valued at a 31 per cent premium compared to the three-month average weighted price.
A call option over 19 per cent of the issued Village shares has been entered into between an associate of the private equity firm and Village Roadshow Corporation, the biggest shareholder in the company. The Kirby brothers and Mr Burke together hold about a 40 per cent stake in the business.
Pacific Equity’s conditional and non-binding offer has been presented as either all-cash or a combination of cash and scrip. The proposal is subject to due diligence, financing, approval from the Foreign Investment Review Board and the recommendation of the Village Roadshow board.
Village advised shareholders in a statement to the ASX on Thursday afternoon that there was “no certainty” the offer would result in a deal.
“The board is currently considering the proposal, including obtaining advice from its financial and legal advisers,” the statement said.
“The board believes that shareholders’ interests are best served by conducting exploratory discussions with [Pacific Equity] to determine whether a proposal that is in the best interests of Village shareholders can be put forward.”
The entertainment business, which runs Gold Coast theme parks like Movie World, Wet’N’Wild and Sea World, posted strong results for the 2019 financial year following a bitter feud between members of the founding family over how the business had been run after a three-year share price slide wiped $500 million off the company’s value.
Pacific Equity previously bought cinema chain Hoyts from a consortium of owners, including James Packer, for $440 million in 2007. The firm invested about $100 million into the company before selling the cinema chain to a Chinese investment company in 2014, reportedly for about $800 million.
The firm declined to comment but sources close to Pacific said Village’s diversified assets across film distribution, marketing, theme parks and cinemas were attractive, with a 65-year history in the sector and strong similarities to Hoyts.
Village Roadshow chairman Robert Kirby and Mr Burke declined to discuss the deal.
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