January 23, 2020 / 11:31 PM / a month ago

Australia's Village Roadshow gets new, 2% higher bid from second PE firm

(Reuters) - Village Roadshow Ltd (VRL.AX) on Friday said it has received an unsolicited buyout offer from a private equity firm that valued the Australian movie theater and theme park operator at A$777 million ($531 million), about 2% more than a earlier rival bid.

BGH Capital offered A$4 per share in cash, Village Roadshow said. That is 10 cents above a bid in December from peer Pacific Equity Partners (PEP).

The offers come as fewer people visit movie theaters, preferring home streaming options such as Netflix Inc (NFLX.O) that have attracted big name directors, and as film producers release new movies on such services shortly after their launch on big screens.

Village Roadshow operates nearly 600 cinema halls, some as part of a joint venture with bigger rival Event Hospitality & Entertainment Ltd (EVT.AX).

It also operates theme parks including SeaWorld in Australia and Warner Bros. Movie World, and owns a stake in a Los Angeles-based affiliate that produced several Hollywood blockbusters such as ‘The Great Gatsby’ and ‘Joker’.

The company has struggled with a cash crunch and a string of losses amid media reports of executive infighting, and its market value has halved from its peak in 2014.

"Theme parks had a difficult time of late in Australia mostly because of the Dreamworld amusement park accident a few years ago," said CommSec market analyst James Tao, referring to an incident here in which four visitors were killed.

Tao, who added the cinema industry was also under pressure from streaming services, said a deal with BGH was more likely given the slight premium to PEP’s offer. Still, talks were in early stages and could go either way, he said.

PEP’s roughly A$761 million offer for Melbourne-based Village Roadshow was at a 22% premium to its closing share price before the bid on Dec. 18. BGH’s bid offers a 25% premium. Village Roadshow’s stock has risen 20% since the first offer.

On Friday, the shares climbed 6.5% to a nearly three-year high of A$4.1. They were trading up 3.6% at 0200 GMT.

While both offers are conditional, Village Roadshow said in December its top shareholder had entered into a call option with an associate of PEP for about 19% of its shares.

PEP, which is looking at Village Roadshow’s books, declined to comment on the rival offer.

Village Roadshow said an independent committee was reviewing both proposals while it worked out a confidentiality agreement to share information with BGH.

Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Arun Koyyur and Christopher Cushing

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