The mooted private equity buyout of Village Roadshow might be looking a bit shaky.
Village Roadshow yesterday revealed that it has extended by two weeks, and possibly four, the exclusivity period for its discussions with BGH Capital Pty Ltd (“BGH”).
“The Transaction Process Deed with BGH has been amended, with the initial four week period being extended by two weeks to 30 June, with a further two-week extension if the parties continue to actively pursue the potential transaction,” Village told the ASX on Tuesday.
Village Roadshow last month agreed to enter a four-week exclusive negotiating period with the private equity firm after a receiving takeover offer of up to $468.5 million.
Longer than planned due diligence periods often mean the interested party has found problems or concerns that it needs to resolve before making its mind up.
Much of the concerns for BGH and village though are operational and involve the restart of its theme parks, especially on Queensland’s Gold Coast and the restart of interstate air travel.
Those decisions are out of the hands of Village and BGH which further complicates the issue.
A further point is the question of what impact does the administration of Virgin Australia has on the deal?
The $2.40-per-share acquisition proposal was significantly lower than the initial $4 a share offer in late January (pre-COVID-19) which valued the target at more than $770 million.
Village Roadshow shares, which had plummeted by 55% since February after the coronavirus pandemic forced it to shut operations, jumped 20.7% to $2.13 following the announcement. They rose 0.14% to $2.18 on Tuesday, perhaps in hope of another bid or higher price.
