Reuters – South Korea’s third-largest movie theatre chain Megabox Inc. is being sold in an auction, sell-side advisor Nomura Holdings said on Wednesday, in a deal estimated by media to be worth about $580.13 million.
Megabox, which operates the nation’s highest-grossing single theatre in Seoul’s wealthy Gangnam area, is 50 percent owned by a consortium including South Korean pension fund managers such as National Pension Service and a fund managed by Macquarie Group.
The consortium, which bought the stake in 2007 for about $300 million, is offering 100 percent of the business as it has the right to force minority shareholders to join the deal.
Teaser letters to potential bidders were sent out this week, with due diligence expected to be conducted in October and a deal by year’s end, Nomura said.
A spokesman for Megabox could not be reached.
Private equity funds Carlyle Group and CVC Capital Partners, as well as China’s Wanda Group, were interested in buying Megabox through a private sale earlier this year but talks collapsed due to disagreements about pricing, Korea Economic Daily reported last month citing unnamed banking sources.
South Korea’s multiplex business is highly consolidated, with the top three cinema chains – CJ CGV, Lotte Shopping’s movie theatre business Lotte Cinema and independent operator Megabox – together taking 95 percent of the market in 2013. Megabox’s share was 19 percent.
Megabox’s earnings before taxes, interest, depreciation and amortisation (EBITDA), a key metric for estimating deal value, adjusted for fiscal 2014 is 53 billion won ($51 million).
Rival CJ CGV’s shares, which do not include management premium, are being traded on the market at 11.3 times EBITDA.
Theatre admissions in South Korea have grown an average of 12.7 percent per year since 2010. (1 US dollar = 1,034.2500 Korean won) (Reporting by Joyce Lee; Writing by Kahyun Yang; Editing by Stephen Coates)