West Australian Newspapers Holdings Ltd has sold its 50 per cent stake in cinema chain Hoyts Group for about $150 million, which is in line with its recently written-down value for the asset.
West Australian Newspapers Holdings Ltd has sold its 50 per cent stake in cinema chain Hoyts Group for about $150 million, which is in line with its recently written-down value for the asset.
In its annual result handed down last month, WA Newspapers slashed the value of its share of the cinema chain from $205 million to $145 million, which was 28.5 million short of the $173.5 million it paid for the group in December 2004.
WA Newspapers today revealed that it and its joint-venture partner Publishing and Broadcasting Ltd had entered into an agreement with private equity firm Pacific Equity Partners for the sale of Hoyts in a transaction that valued the cinema chain at $440 million on an enterprise value basis.
When WA Newspapers and PBL bought Hoyts the business had an enterprise value of $520 million. At the time many analysts questioned the deal.
Bell Potter Securities head of wealth management Heather Zampatti said it was regarded as "out of the box" and had been a business that had underperformed.
"The market will generally be pleased to see it sold," Ms Zampatti said.
WA Newspapers shares ended 1.4 per cent higher, or up 21 cents, to $15.
Both WA Newspapers and PBL are expected to realise about $150 million when the sale is completed in November.
Hoyts owns Australia and New Zealand cinemas, including Val Morgan cinema advertising and film distribution.
Completion of the sale is subject to approval from the Foreign Investment Review Board and the New Zealand Overseas Investment Office.
Pacific Equity Partners managing director, Rickard Gardell, described Hoyts as the leading cinema exhibitor and advertiser in Australasia.
"We look forward to partnering with an excellent management team and investing in future growth opportunities," he said.
The full text of a PBL/WAN announcement is pasted below
Publishing and Broadcasting Limited (PBL) and West Australian Newspapers Holdings Limited (WAN) announced today that they have entered into an agreement with Pacific Equity Partners (PEP) for the sale of the Hoyts Group in Australia and New Zealand (Hoyts), which has operations comprising of cinema exhibition, Val Morgan cinema advertising and film distribution.
The transaction values Hoyts at A$440 million on an enterprise basis and completion is subject only to approval from the Foreign Investment Review Board (FIRB) and the New Zealand Overseas Investment Office (NZOIO). The sale is expected to complete by November 2007 and realise approximately A$150 million for each of PBL and WAN.
The CEO New Media of PBL, Martin Dalgleish, said he welcomed the agreement and wished the management and staff every success in continuing its current performance under PEP's stewardship. "Hoyts is one of the true iconic and leading entertainment brands of the region".
The CEO of WAN, Ken Steinke, said, "WAN has enjoyed its ownership of Hoyts since 2005, during which time management and staff have delivered operational improvements and have positioned the business well for the future".
Rickard Gardell, Managing Director of PEP, said "We are very excited to be acquiring the leading cinema exhibitor and advertiser in Australasia. We look forward to partnering with an excellent management team and investing in future growth opportunities."
UBS acted as financial adviser to PBL and WAN in relation to the sale process.
