Theme parks and cinema operator Village Roadshow has agreed to exclusive negotiations with private equity firm BGH Capital after a caveat-heavy takeover offer of up to $468.5 million.
The preliminary agreement announced on Monday morning puts an end to months of takeover speculation and competing bids for the troubled entertainment provider, which has endured a 55 per cent plunge in its share price since February, as the coronavirus pandemic forced it to cease virtually all operations.
As a result, the $2.40-per-share acquisition proposal is significantly lower than the initial $4-per-share offer made by BGH in late January, which valued the target at more than $770 million, and includes a number of caveats if the company wants to receive the full offer price. The proposal also undershoots a rival offer from prominent equity firm PEP, issued in late 2019 and worth $3.90 per share.
BGH’s proposal is a base offer of $2.20 per share, with an additional offer price of 12¢ per share if Village’s Warner Bros. Movie World and Sea World parks have reopened to the public three business days prior to the day Village shareholders approve the transaction.
An additional 8¢ per share will be offered if the majority of Village’s cinema locations are reopened to the public by the same date.
The total $2.40-per-share offer price is a 36 per cent premium on Village’s $1.76 closing price on Friday and has a total value of $468.5 million. If the caveats are not met, the offer’s value would drop to $430 million.
Village shares soared 20.7 per cent to $2.13 following the announcement.
BGH, which is also a lead bidder for collapsed airline Virgin, has proposed two separate share acquisition structures, each of which will be considered sequentially by shareholders.