BGH to buy Australia's Village Roadshow for $543m

This compares to a A$761 million bid submitted by Pacific Equity Partners in December 2019 and a A$783 million offer from BGH in January 2020. Both investors continued to review the Sydney-listed company following the outbreak of COVID-19 locally, which shuttered most operations. However, BGH was granted exclusive due diligence access in May.

BGH has now agreed to pay up to A$2.45 per share. The stock climbed as high as A$2.16 following the offer and was trading at A$2.12 as of mid-afternoon August 10, giving the company a market capitalization around A$414 million. This represents an approximately 50% loss in value since the onset of the pandemic in Australia.

“We are delighted to be investing in Village, which has over a 91-year period built an incredibly well-positioned business, delivering wonderful and unforgettable experiences to generations of Australians,” Ben Gray, founder of BGH, said in a statement. “Village’s theme park and cinema assets are irreplaceable, and we plan to invest heavily in the business over the next several years. We live in extraordinary, unsettled times, but our eyes are focused on the longer-term investment.”

Village Roadshow’s operations include Queensland theme parks Warner Bros Movie World, Sea World, Wet’n’Wild, and Paradise Country, as well as Topgolf, Australian Outback Spectacular, and a portfolio of 57 cinema locations across the country. All of these were closed due to coronavirus control restrictions in May. As of last week, all Queensland operations were open, operating at a reduced capacity to comply with safety protocols. Customers have been predominantly local.

Cinemas in metropolitan Melbourne and some areas of Victoria remain closed in line with government directives. Cinemas across the rest of Australia are operating under social distancing rules in each state and territory. The company, which is also involved in film and television production, noted that although there have been significant deferrals in the release of films, it expected they would begin to become more available to cinemas later this month or early next month.

Village Roadshow said last week that it continued to operate on a negative cash basis despite the re-openings and that it expected this to continue for several months. As of the end of June, the company had a net debt position of about A$280 million. This includes a A$70 million facility from the Queensland Treasury Corporation that remains undrawn and is expected to be sufficient to meet cash needs for the next 12 months.

Revenue came to A$980.5 million 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.

BGH, which was established in 2017 by Gray, formerly Asia co-head of TPG Capital, is currently investing its debut fund, which closed at A$2.6 billion last year. It is the largest ever first-time private equity fund focused on Australia and New Zealand.

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• Topics
• Australasia
• Consumer
• Buyouts
• Australia
• BGH Capital
• coronavirus
• covid-19