Village Roadshow agrees to takeover talks with BGH
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 seen its share price tumble 55 per cent since February as the coronavirus forced it to cease virtually all operations.
Village Roadshow owns and operates Warner Bros Movie World on the Gold Coast.Credit:
As a result, the $2.40 per share acquisition proposal is significantly lower than BGH's initial $770 million offer made in late January of $4 per share and includes a number of caveats if the company wants to receive the full offer price.
The offer is also under 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 Seaworld 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 15.3 per cent to $2.04 following the announcement.
BGH has also proposed two separate share acquisition structures, each of which will be considered simultaneously by shareholders.
Structure A would see BGH acquire the around 40 per cent Village stake owned by the Kirby family and former chief executive Graham Burke, and then purchase the remaining shares via a scheme of arrangement.
The Kirby family and Mr Burke would receive shares in the new unlisted BGH-controlled company along with a portion of cash, where the rest of the company's shareholders could choose to receive either cash or some shares and some cash.
Structure B would see BGH acquire all shares from all shareholders in Village in one scheme of arrangement, with all shareholders given an option to receive either cash or a mixture of cash and shares.
The second arrangement would only be considered by shareholders if the first was not approved, and comes in at a lower offer price of $2.10 per share.
BGH's acquisition proposal is subject to standard due diligence, FIRB approval and also for there to be no further material deterioration in Village's operating environment.
Village said it intended to remain "significant and committed" shareholders in any privatised business, with chief executive Clark Kirby and executive chairman Robert Kirby both intending to remain on board.
The company will now spend four weeks completing due diligence with BGH, though warned there was "no certainty the proposal will result in a transaction".