Outgoing Village Roadshow chief Graham Burke.Credit:Eddie Jim
Village Roadshow's share price jumped 17.5 per cent to $3.76 by 3.40pm on the back of the news of the deal,taking the stock to its highest value since May. Shares in Village closed at $3.20 on Wednesday ahead of the announcement and the deal is valued at a 31 per cent premium compared to the three-month average weighted price.
A call option over 19 per cent of the issued Village shares has been entered into between an associate of the private equity firm and Village Roadshow Corporation,the biggest shareholder in the company. The Kirby brothers and Mr Burke together hold about a 40 per cent stake in the business.
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Pacific Equity's conditional and non-binding offer has been presented as either all-cash or a combination of cash and scrip. The proposal is subject to due diligence,financing,approval from the Foreign Investment Review Board and the recommendation of the Village Roadshow board.
Village advised shareholders in a statement to the ASX on Thursday afternoon that there was"no certainty"the offer would result in a deal.
"The board is currently considering the proposal,including obtaining advice from its financial and legal advisers,"the statement said.
"The board believes that shareholders'interests are best served by conducting exploratory discussions with[Pacific Equity] to determine whether a proposal that is in the best interests of Village shareholders can be put forward."