Mittleman Brothers’ Christopher Mittleman, whose fund owns more than 5 per cent of Village Roadshow, said a buyout “should not occur at less than $5.42 a per share”, which represents 9 times earnings before interest, tax, depreciation and amortisation.
Mr Mittleman said both bids roughly valued the company at 7 times EBITDA, and noted that in the six years before the Dreamworld tragedy, Village traded at an average 8.6 times EBITDA – without a premium for control.
He added that Village Roadshow operates Sea World, which trades at 10 times EBITDA, while in the movie theatre space Cineplex in Canada was just bought out by Cineworld for 10 times EBITDA.
A data room is not yet ready and Village is still putting together all the information needed to open up for the buyout firms.
Last week, The Australian Financial Review’s Street Talk column revealed UBS, which is advising the company, was sounding out rival bids to drive a potential auction for Village. Shannon Wolfers and David Brown are leading the deal for PEP.
Following PEP’s bid in December, Village shareholders had been pushing the company to start a process to potentially get a higher offer.
Various break-up scenarios done by a number of investment banks have suggested Village Roadshow could be worth between $4 and $5 per share.
Associates of PEP took out a call option on a 19 per cent stake in Village Roadshow via a purchase from the company’s largest shareholder, Village Roadshow Corporation.
Village Roadshow Corporation owns 34 per cent of the ASX-listed Village Roadshow and is owned equally by the Kirby brothers and Mr Burke.
The three each own additional shares for a combined controlling 42 per cent voting stake.
John Kirby has been warring against his brother Robert and Mr Burke for the past 18 months. He has been unable to use his shareholding because it is held in the private vehicle and he has been outvoted by his brother and Mr Burke.
The family boardroom feud spilled out into the public domain in early 2019. John Kirby and other major shareholders have advocated for the sale of assets to focus on the Australian theme parks and cinema businesses, a reduction in large corporate overheads and an independent chief executive and chairman.
In February, Mr Burke announced he would cede the role of chief executive at the end of 2019. However, Village Roadshow in June announced that Robert Kirby’s son, Clark Kirby, would replace Mr Burke. Robert Kirby also announced he would relinquish control of his chairman role, and stripped John Kirby of his deputy chairman title.
Clark Kirby began as Village Roadshow chief executive on January 1.
The Kirby brothers and Mr Burke will not be part of the board deliberations on the deal.
Former Foxtel chief executive Peter Tonagh is heading a committee as the lead independent non-executive director.
Village shares were trading at $4 late in the session on Friday.