EVENT's German problem child offloaded for $358 million
Written on the 22 October 2018 by David Simmons
EVENT Hospitality & Tourism (ASX: EVT) has said auf wiedersehen to its chain of German cinemas after determining it to be a dead end at the end of FY18.
The listed company behind QT resorts, Event Cinemas, and Thredbo Alpine Resorts today announced it has sold its German cinema chain CineStar for potentially $358 million.
Vue International Bidco, one of the world's leading cinema operators, will pay upfront $210 million and a variable consideration of up to $148 million depending on German market admissions for the 2019 calendar year. This represents a maximum potential enterprise value for CineStar of $358 million.
The sale of CineStar follows a strategic review of EVENT's businesses where they determined that CineStar was weighing the company down.
At the time CEO Jane Hastings said that whilst CineStar was performing well, it offered nothing in the long term to EVENT.
"CineStar has delivered a good return over the last decade and maintains a consistently strong German market share position, however, it brings no economies of scale to our other cinema businesses," said Hastings.
"We are therefore exploring options for CineStar, in conjunction with our local investment and development opportunities to deliver future sustained growth for shareholders."
Today, Hastings says the sale is a strong result for EVENT.
"The sale of CineStar crystallises value for shareholders at an attractive price and there is the potential for upside to the value realised, should German market admissions grow," says Hastings.
"We are confident that the divestment is in the best interests of shareholders and will allow us to recycle capital proceeds into other value accretive opportunities. We have a strong pipeline of potential future developments to drive growth in the medium to long-term."
Back in August the company also announced its divestment of QT Port Douglas and Rydges Gladstone, which had both negatively contributed to earnings for several years.
Business News Australia
Author: David Simmons