BGH offers $536m for Australia media group

It comes one month after Pacific Equity Partners (PEP) submitted a bid that valued the company at A$761.2 million. Village Roadshow said it was still considering the PEP proposal and has now begun an assessment of the BGH offer as well. The business has reportedly been troubled by disputes within the founding family regarding future planning. 

BGH, which was established in 2017 by Ben Gray, formerly Asia co-head of TPG Capital, is willing to pay A$4.00 per share. This compares to an offer of A$3.90 from PEP. BGH is offering an all-cash consideration or a combination of cash and unlisted shares in a newly created holding company, according to a release.

The stock spiked 23% following the PEP bid and has traded in a range of A$3.80-3.90 for the past month. It was trading at A$3.99 as of midday January 24, giving the company a market capitalization of around A$777 million.

Village Roadshow was established in 1954 as a drive-in cinema manager. The company has expanded into a range of media and entertainment interests including traditional cinemas and multiplexes, film production and distribution, television production, and theme park operation.

The company generated A$980.5 million in revenue for the 2019 financial year, up from A$952.8 million in 2018. Over the same period, the net loss widened from A$3.4 million to A$9.6 million. Theme parks, cinemas and film distribution together account for the vast majority of revenue, while marketing and asset impairments were behind most of the losses.

In addition to operating properties such as Sea World, Warner Bros Movie World, Australian Outback Spectacular, and Wet'n'Wild in Australia, Village Roadshow has an international presence in the form of Wet'n'Wild Las Vegas and Wet'n'Wild Haikou. There is also a Lionsgate Entertainment World theme park on Hengqin Island in China, which the company describes as part of an Asia theme park initiative.

In the 1990s, Village Roadshow expanded its cinema business into 20 countries but has since retracted to an exclusive focus on Australia, where it has 577 screens across 57 sites. During this period, the company also ventured into radio broadcasting but eventually integrated the relevant asset into a separate entity, Austereo Group, and relinquished majority control in 2011.

The film production and financing business is considered a key asset, having recently backed Hollywood movies including Ocean's 8, Joker, and The Great Gatsby. Village Roadshow Pictures is part of a Los Angeles-based company called Village Roadshow Entertainment, which is 20% owned by Village Roadshow.

BGH is currently deploying its debut fund, which closed at the hard cap of A$2.6 billion in 2018. PEP achieved a first close of A$2 billion last year on its sixth buyout fund. The hard cap is A$2.5 billion.

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• Topics
• Australasia
• Media
• Buyouts
• Consumer
• Australia
• Pacific Equity Partners
• BGH Capital