The US-based investment firm has submitted a proposal to acquire Cineworld’s operations outside the United Kingdom and United States as the London-listed company fights for survival.
The renowned activist investor Elliott Management is plotting a takeover of significant portions of Cineworld, a struggling cinema operator listed on the London Stock Exchange.
Elliott is interested in acquiring Cineworld’s eastern European and Israeli operations.
Elliott is believed to have also considered a bid for the entire insolvent group, but its latest proposal to Cineworld’s advisers does not include the company’s UK and US operations, according to sources.
In recent years, Elliott, one of the parties involved in the sale of Manchester United Football Club, has become an increasingly active private equity investor.
Among the consumer-facing enterprises it has supported are Barnes & Noble, Waterstones, and Claire’s, a fashion accessories retailer.
It is rumored to be interested in Cineworld as the cinema industry continues to recuperate from the pandemic, buoyed by the release of No Time To Die, Daniel Craig’s last James Bond film, and the Avatar sequel.
Elliott had engaged Sir Mike Rake, the former chairman of BT Group and former president of the CBI, to improve its historically hostile reputation among UK board members.
Elliott has amassed stakes in FTSE-350 companies in recent years, including BHP, the mining behemoth, GlaxoSmithKline, the drugs giant, Hammerson, the owner of shopping centers, and Whitbread, the owner of Premier Inn hotels.
At the majority of them, it has either publicly or covertly advocated for strategic or management changes, earning it a reputation as one of the world’s most aggressive activist funds.
Paul Singer established the US-based Elliott Management in the 1970s with just over $1 million under management.
It now manages close to $55.7bn, and Mr. Singer’s son, Gordon, runs the London office.
A small number of parties were reportedly interested in purchasing portions of Cineworld, which has grown in recent years to become the second-largest cinema chain in the world.
In the United Kingdom, it operates under its parent company’s name and owns the Picturehouse chain, whereas, in the United States, it owns the Regal multiplex portfolio.
It operates in Bulgaria, the Czech Republic, Hungary, Israel, Romania, and Slovakia, among other countries.
This weekend, one analyst assessed the value of Cineworld’s operations outside the United Kingdom and the United States to be approximately $500 million.
The London-listed company, which went public in 2007, has issued a warning that any agreement to split it up is unlikely to generate shareholder value.
The stock of Cineworld, which filed for Chapter 11 bankruptcy protection in the United States last year, has dropped by nearly 95% over the past year.
Its current market capitalization is only £31 million.
Also this weekend, it was unclear who else was interested in acquiring the company, as rival cinema operator Vue International was recently excluded from the auction process.
Tim Richards, the founder of Vue, was attempting to orchestrate a merger between two of the largest cinema operators in the United Kingdom, while the founder of Picturehouse was in discussions with him about buying it back as part of a break-up of Cineworld.
Cineworld reiterated in a Friday stock exchange announcement that it “remains in discussions with its key stakeholders to develop a Chapter 11 plan of reorganization that maximizes value for the Group and its stakeholders.”
“The marketing process that was announced on January 3, 2023, continues concurrently.
“As previously announced, it is not anticipated that any reorganization plan or sale transaction will result in a recovery for Cineworld’s shareholders.”
The investment bank PJT Partners is advising Cineworld on the auction.
