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‘Consortium tunes in to Reading with a takeover approach’
Posted on Thursday, 08 November 2018 14:58
Reading International, a US-based theatre chain, has received a non-binding proposal by a group of investors to take over the Angelika and City Cinemas business, Bloomberg reported, citing the letter received by the company’s board.
According to the information seen by the news provider, Patton Vision, TPG, Madison Dearborn Partners and Santo Domingo Group are among those said to be interested in the potential target.
Reportedly, the offer values Reading at USD 595.20 million, including the assumption of USD 151.10 million in debt.
The bid was determined based on the average premium of the company’s share price and is worth USD 17.22 per item of class A common stock, and USD 37.38 for the class B scrips.
Reading’s trading price totalled USD 15.20 on 7th November, the last day prior to the news, valuing the business at USD 349.45 million.
The offer, should it go ahead, represents a premium of 13.2 per cent to the close on 7th November.
Reading’s board is expected to review the unsolicited bid in due course and will make a further statement thereafter, a representative for the company told Bloomberg.
The news provider observed how cinema attendance has grown in 2018 after years of continuous decline, with expansions expected to continue into 2019.
In addition, Reading posted its third quarter financial results on the day prior to the report, where it recorded its highest third-quarter revenue on record.
It generated turnover of USD 234.40 million in the nine months to 30th September 2018, a 13.0 per cent increase on USD 208.00 million in the corresponding period of 2017.
Earnings before interest, taxes, depreciation and amortisation for the opening three quarters totalled USD 35.90 million, a 27.0 per cent decline from USD 49.40 million in Q1-Q3 2017.
Cinema operators have been targeted in 45 deals worldwide in 2018, according to Zephyr, the M&A database published by Bureau van Dijk.
The largest such transaction was worth CNY 7.79 billion (USD 1.13 billion) and involved Cultural Investment Holdings and Alibaba Group’s Hangzhou Zhenxi Investment Management buying a minority stake in China’s Wanda Film Holding.
AMC Entertainment Holdings, CMS Cinema Management Services and SPI Cinemas, among others, have also been targeted.
© Zephus Ltd