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Village Roadshow shares surge after $780 million buyout offer

The Village Roadshow Ltd (ASX: VRL) share price is up 4% in early trade after receiving a $780 million takeover bid from a private equity group.

What did Village Roadshow announce today?

Village Roadshow shares are currently up 4% having received a $4 per share takeover offer from BGH Capital.

The unsolicited bid is higher than the $3.90 per share bid received from Pacific Equity Partners in December 2019. The Village Roadshow share price climbed 21.56% higher in one day just before Christmas on the back of the news.

At $4 per share, the offer is a 25% premium on the $3.20 per share valuation prior to the first unsolicited bid.

While the movement hasn’t been as big today, it is another step in the buyout process. There’s every chance that the now-bidding war between the private equity groups could push Village Roadshow’s value even higher.

The group currently has a market cap of $751.43 million compared to the $780 million unsolicited, non-binding indicative proposal this morning.

BGH is willing to offer all cash or a combination of cash and unlisted shares in consideration. That was also the case for Pacific Equity Partners in their December offer.

An independent board was establish following the December offer and that will now review the BGH offer.

The Village Roadshow share price is one to watch as competition heats up for the Aussie media company.

How has the Village Roadshow performed recently?

While the short-term run for the group’s shares has been helped by these takeover bids, the longer-term performance hasn’t been as good.

The group’s shares have slumped 34.19% in the last 5 years in a disappointing run for shareholders.

However, these private equity groups clearly see some value in the Aussie media company. Given the interest in the group, the Village Roadshow share price will be one of those ASX shares well worth watching in 2020.

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Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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