Village shares up as suitor circles

THE private equity house that owned cinema chain Hoyts has made a takeover play for rival Village Roadshow after snapping up a major stake in the group.

Shares in Village surged yesterday after Pacific Equity Partners tabled a buyout proposal valuing the cinema and theme park heavyweight at up to $1 billion.

Pacific Equity has proposed paying $3.90 a share for Village — a premium of more than 20 per cent on Wednesday’s closing price.

The Sydney-based private equity firm, which was among losing bidders for biscuit maker Arnott’s earlier this year, has taken a 19 per cent stake in the entertainment group.

Shares in Melbournebased Village rallied after the approach was announced, spiking 21.6 per cent, or 69c, to $3.89.

The suitor’s proposal gives the company a market value of $761.2 million, and a value as high as $1 billion when debt is factored in.

It comes at a critical juncture for Village as long-serving chief executive Graham Burke prepares to retire from his role at the end of the month. Pacific Equity owned Hoyts from 2007 to 2014.

The private equity house reportedly paid $440 million for that chain, buying it from West Australian Newspapers and Publishing and Broadcasting Limited, then majority owned by James Packer.

It sold Hoyts for $850 million to China’s Dalian Wanda Group.

In Australia, Village has almost 600 screens across 58 sites in combination with joint venture partner Event Hospitality and Entertainment.

It also owns Gold Coast theme parks including Movie World, Sea World and

Wet’n’Wild. In a statement yesterday, Village said the buyout proposal was conditional, non-binding and indicative.

But it said directors believed it was in the interests of shareholders for the group to hold talks with Pacific Equity.

The cinema group said it wanted to determine whether “a proposal that is in the best interests of … shareholders can be put forward”.

Village Roadshow’s shares, which had fallen heavily mid year, have since rebounded and were up 18 per cent for the year before yesterday’s rally.