Open theme parks unlock value for Village Roadshow bid
Village Roadshow has said the successful public opening of its theme parks Warner Bros, Movie World and Sea World has triggered a 12¢ lift to the takeover bid from suitor BGH to $2.32 per share.
It was one of the contingent payments announced as part of the proposed offer in August when Village and BGH agreed to a deal where shareholders could receive up to $2.45 per share.
The Monday announcement comes as two major Village Roadshow investors, with enough shares to block the $758 million bid, rubbished the current offer.
The markets reacted positively with Village Roadshow shares rising more than 3.5 per cent to a high of $2.39 in mid-afternoon trading.
Structure A of the proposed bid announced in August offered shareholders a base price of $2.20 per share, with an additional 25¢ per share dependent on the reopening of theme parks, cinemas and Queensland borders.
Village Roadshow said the 12c per share theme parks payment is expected to be formally triggered this Friday due to the theme parks having stayed open since July.
However, the border and cinema reopening events, worth an additional 13 cents per share, will not be triggered because the Queensland border remains closed and major film releases have been delayed.
“Given Queensland border restrictions as at 1 November 2020 and the deferral of major film releases, the parties to the implementation agreement have agreed that those uplifts will not be payable,” Village Roadshow said in its announcement.
“The BGH transaction provides the opportunity for all Village Roadshow shareholders to realise an attractive cash price for all of their Village Roadshow shares, in a very uncertain operating environment. It represents significant value for all Village Roadshow shareholders relative to all alternatives, including
the status quo,” the company said.
Spheria Asset Management, which holds a 7.8 per cent stake in Village, making it the second largest independent shareholder and a crucial voter at a scheme meeting later this month, has indicated it does not like the current offer and would prefer to help recapitalise the business.
Village’s other major independent shareholder, Mittleman Brothers, has publicly disclosed plans to block the sale.
Brothers John Kirby and Robert Kirby and former chief executive Graham Burke control about 42 per cent of the company, but are unable to vote under this structure which means that Mittleman and Spheria, should they choose, have the ability to block the bid.
If the first offer is rejected, BGH will offer structure B at a lower $2.10 per share offer with the 25¢ additional payments.
The scheme will be put to a vote on November 26. It needs to be approved by 75 per cent of shares cast at the meeting and more than 50 per cent of investors by number.
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Colin Kruger is a business reporter. He joined the Sydney Morning Herald in 1999 as its technology editor. Other roles have included the Herald’s deputy business editor and online business editor.
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Source: Thanks smh.com