Why the Village Roadshow (ASX:VRL) share price is on the rise today

The Village Roadshow share price was higher today after the company announced an uplift to the takeover offer by BGH Capital.

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ASX shares soaring higher

The Village Roadshow Ltd (ASX: VRL) share price is up today after a company announcement. The company advised that its shareholders were set to receive an uplift to the takeover offer from private equity firm, BGH Capital. At the time of writing, the Village Roadshow share price is up 2.62% at $2.35 cents.

What did Village Roadshow announce?

Village Roadshow advised today that due to the re-opening of Warner Bros Movie World and SeaWorld on the Gold Coast, the takeover offer by BGH under structures A and B would be subject to an uplift of 12 cents per share. This had been agreed to and locked in by both parties, the company said. 

If structure A receives 75% of the votes by shareholders, $2.32 cash will be paid for each Village Roadshow share, including the uplift. Shareholders also have the option to take 1 HoldCo share for every Village Roadshow share under structure A.

Structure B will be considered by shareholders if structure A is not approved and allows for the payment of $2.22 per Village Roadshow share, including the uplift. Structure B will also require 75% of the votes from shareholders in favour of the offer to go ahead. Under Structure B shareholders will also be given the option to retain 100% of their Village Roadshow shares, which will be delisted from the ASX. 

Given that Queensland border restrictions remain in place and that there has been a deferral of major film releases, the parties have agreed that the further potential uplifts will not be payable to Village Roadshow shareholders. These were known as the ‘border uplift’ and the ‘cinema uplift’. 

Village Roadshow’s independent directors have recommended that the company’s shareholders vote in favour of both structure A and structure B as part of the offer by BGH. An independent expert has also recommended that the offer is in the best interests of Village Roadshow shareholders.

About the Village Roadshow share price

Village Roadshow is an entertainment company that operates theme parks and cinemas in addition to its film production and film distribution businesses. Village Roadshow was founded in 1954 and is an iconic Australian company. 

In September, the company announced that Warner Bros would not renew its contract for film distribution by Village Roadshow, which is set to expire on 31 December 2020. Village Roadshow said the arrangement with Warner Bros did not have a material effect on earnings before interest, tax, depreciation and amortisation (EBITDA) after costs in the 2020 financial year.

EBITDA was $82.9 million in FY20, and the company posted a net loss after tax of $117.35 million.

The Village Roadshow share price is up 206.49% since its 52-week low of 77 cents, however, it is down 38.22% since the beginning of the year. The Village Roadshow share price is down 25.55% since this time last year.

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Motley Fool contributor Chris Chitty 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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