BGH lobs $780m bid for Village

The battle for Village Roadshow is heating up, with private equity firm BGH Capital lobbing a rival takeover proposal.

Robert Kirby stepped down as executive chairman.

The battle for cinema and theme park owner Village Roadshow is heating up, with private equity firm BGH Capital lobbing a rival takeover proposal as it looks to take on fellow local investment house PEP.

The suitors are fierce rivals and vying to win control of the famed entertainment company with the hopes of selling off its smaller, less profitable businesses to focus on movies and theme parks, as both units are turning around.

BGH Capital’s move comes in the wake of PEP striking a pre-Christmas option deal with the Kirby family-controlled Village Roadshow Corporation, which owns a major stake in the listed Village Roadshow that gave it an option over a 19 per cent stake in the company.

The latest proposal — at $4 per share — is at a slight premium to PEP’s $3.90 per share proposal and could prompt the initial suitor to sweeten its offer.

BGH Capital’s bid is worth about $780m.

Both bids come after a process the company quietly ran last year, which the two private equity firms were invited into alongside offshore firm TPG Capital.

Nothing came of that move but private equity firms have been spending up on cinema operations globally and BGH Capital’s offer for Village Roadshow is in keeping with the trend to back the industry despite headwinds from streaming services.

Village Roadshow closed up 17c at $4.02

BGH Capital, set up in 2017 by the high-profile trio of Robin Bishop, Ben Gray and Simon Harle, had made a number of takeovers, including student pathways company Navitas and cybersecurity roll-up CyberCX.

Village investors are punting that a further rise could be in the wings as Village Roadshow shares closed up 17c, or 4.4 per cent, on Friday at $4.02.

The company said its board was still in the midst of considering the PEP proposal and would now look at the BGH Capital offer.

BGH Capital has flagged that it could pay in cash or a combination of cash and shares in a newly incorporated holding company.

This could allow the Kirby family to retain a stake and see third-generation chief executive Clark Kirby, who stepped into the post this month, retain a role.

Village Roadshow dropped to a $6.6m loss last financial year but its turnaround program is paying dividends, with the company slashing debt by 35 per cent.

BGH Capital’s proposal is subject to conditions, including completion of due diligence, arrange­ment of financing, FIRB approval and recommendation by the board.

An independent committee of Village Roadshow’s board was set up after the company received the PEP proposal and it is still working on that while also assessing the BGH Capital move.

Village Roadshow has appointed UBS and Stratford Advisory Group as financial advisers.

The company was racked by conflict between brothers John and Robert Kirby last year, with John, who was deputy chairman after stepping back from executive duties in 2012, agitating for changes in the way it was run.

The push led to the departure of veteran chief executive Graham Burke last month.

Robert Kirby also stepped down as executive chairman in June.