Vue International has secured backing from Barings and Farallon Capital Management in advance of Cineworld’s bid deadline later this week.
Europe’s largest privately owned cinema operator has secured financial backing from its new shareholders to mount a takeover bid against its struggling competitor, Cineworld.
Barings and Farallon Capital Management have agreed to provide Vue International with capital to finance strategic acquisitions.
According to city sources, Vue, backed by the two funds, will be among the bidders for Cineworld before the deadline set by the latter’s advisers later this week.
Cineworld, which is publicly traded in London and is, like Vue, one of the largest cinema chains in the United Kingdom, has filed for Chapter 11 bankruptcy protection in the United States and is now conducting a formal auction of its assets.
The company announced last month that it would “run a marketing process in search of a value-maximizing transaction for the Group’s assets, with an emphasis on proposals for the Group as a whole.”
“Cineworld has not and will not launch an individual marketing effort for the sale of any of its assets.”
In the past year, Cineworld’s shares have decreased by 90 percent, and the entire group is now valued at less than £60 million, reflecting the fact that investors risk being wiped out in any sale.
On Monday, the identities of other potential bidders for Cineworld were unknown.
Vue, along with the rest of the industry, was severely impacted by the pandemic and was forced to undergo its financial restructuring. Which was completed just a few weeks ago.
After a £470 million debt-for-equity swap, the company’s balance sheet is now in solid shape. And founder Tim Richards has stated publicly that he wishes to capitalize on opportunities to consolidate the industry.
Monday, a Vue spokesperson stated, “Our focus at Vue remains on managing the robust recovery our business is experiencing.
Therefore, it would be premature to speculate about any acquisitions at this time. But we are constantly evaluating a variety of potential opportunities.
Vue is rumored to be most interested in acquiring Cineworld assets in a select number of countries, so it may need to find buyers for those it does not want.
Two of the top three biggest films in UK history have been released in the last few years. Daniel Craig’s final appearance as James Bond in No Time To Die and Spider-Man: No Way Home.
Vue’s existing Canadian pension fund shareholders, the Alberta Investment Management Corporation (AIMCo) and Omers. Relinquished their ownership status during last year’s debt-for-equity swap.
They acquired Vue in 2013 for close to £1 billion and subsequently oversaw a series of acquisitions that helped transform the group into one of Europe’s largest cinema operators.
In 2019, which was a record year for Vue. They began exploring a sale but were unable to conclude the COVID-19 crisis brought the leisure industry to its knees.
Its recent financial restructuring provided the company, which employs over 8,000 individuals, with an additional £75 million in liquid assets.
Mr. Richards, who also serves as chairman of the British Film Institute, has referred to the post-pandemic era. As “the second golden age of cinema” due to the resurgence of audience interest in entertainment destinations.
Vue operates nearly 2,000 screens in nine European markets, including Germany, Italy, and Poland, from roughly 230 locations.
During the pandemic, the company was forced to lay off thousands of UK-based employees. And its sites were closed for months.
Mr. Richards had to fight Vue’s UK landlords for rent concessions during closures.
In the United Kingdom, only Cineworld and Odeon have more locations than Vue.
