Australia’s Struggling Village Roadshow Agrees To Exclusive Takeover Talks With BGH Capital

Australian theme park and movie theater operator Village Roadshow said Monday it’s agreed to exclusive takeover talks with BGH Capital after the private equity firm offered to buy it for $465 million – or about $2.40 a share – its second offer, and a lower one.

The company said BGH will have four weeks to review its books after the revised, non-binding offer.

The company has been the target of ongoing takeover speculation and several bids. Its stock — along with others in the sector — has become increasingly cheap as the coronavirus pandemic forced its businesses to shutter, choking off revenue.

The shares, which are publicly listed in Australia, had fallen 55% since February before COVID-19 hit. They jumped 20% Monday to $2.13.

The talks start at a much lower base than BGH’s previous $4 per share offer for the parent of the Warner Bros. Movie World chain. Another private equity firm, PEP, offered $3.90 a share late last year.

Village Roadshow also owns the Village Roadshow Studios at Gold Coast in Queensland, Australia as well as 31% of New York-based sales and production company FilmNation, and 20% of Village Roadshow Entertainment Group- the LA based co-producer of Joker.

BGH’s proposal is a base offer of $2.20 per share, with conditions: it has offered an additional 12 cents 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. It will sweeten the bid by another 8 cents a share if the number of cinemas open represent a majority of the locations, or 75% of the division’s revenue.

BGH is an Australian and New Zealand-focused private equity firm that’s also on the short list of companies to take over Virgin Australia.

All figures are in Australian dollars.

In an earlier announcement on Monday, Village Roadshow said its theme parks and cinema halls would remain closed due to the novel coronavirus outbreak, and that it was in regular contact with local and federal governments about easing physical distancing restrictions imposed to stop the virus spreading.