Pacific Equity Partners buys cinema operator

Pacific Equity Partners has agreed to acquire Hoyts in a transaction that values the cinema business with operations in Australia and New Zealand at A$440 million. This comes on the heels of a smaller take-private deal proposed by Navis Capital.

Pacific Equity Partners, an Australian buyout manager raising $4 billion for investments in Australia and New Zealand, has agreed to acquire Hoyts Group, an operator with 55 cinemas across both countries. The transaction values the business, which includes advertising and film distribution, at A$440 million ($382 million; €271 million).

The deal follows the buyout firm’s failure to complete the acquisition of a 30 percent stake in travel agent Flight Centre in a transaction that values the latter at A$1.6 billion.

This time around, PEP has entered into an agreement with Australia’s Publishing and Broadcasting Limited and West Australian Newspapers to acquire their shares in Hoyts in a deal that is expected to return each seller approximately A$150 million. West Australian Newspapers has been an owner in Hoyts since 2005.

The sale is subject to approval from Australia’s foreign investment review board and New Zealand Overseas Investment Office. UBS acted as a financial adviser to the sellers.

The agreement comes at a time when the flow of financial sponsored deals in Australia has been relatively low, partly due to more conservative lending for larger-scale acquisitions, market sources say. Most private equity participants remain upbeat that smaller deals, under the billion dollar mark, will be easier to complete.

Last week, Navis Capital Partners, a private equity firm with offices across Asia, made an offer for Beyond International, an Australia-listed television production company, in a deal that values the business at A$74.6 million.

The board has agreed to Navis’ A$1.22 cash per share offer and the proposed takeover subject to approval by BYI shareholders at a meeting expected to be held in November, according to an exchange filing.