HONG KONG — Golden Harvest Entertainment’s plans to sell off a stake to Rupert Murdoch and two Asian magnates have been interrupted by a possible offer from Australian entertainment giant Village Roadshow to take control of the film distribution company.
Golden Harvest said Thursday it planned to place 37.7 million shares at HK50¢ a share with an affiliate of Murdoch’s 20th Century Fox and companies owned by Hong Kong tycoon Li Ka-shing and Malaysian Robert Kwok. That would give the three a 16.7% stake and raise about HK$56 million ($7.2 million) in capital.
Village Roadshow, which already owns 16% of Golden Harvest, responded by making known its intention of offering about HK$396 million ($51 million), or HK70¢ a share, for the entire company.
In a statement, Village’s directors said “no formal takeover bid has been served on Golden Harvest.” It added, however, that “as a result of the proposed placement, the company has entered into discussions about a possible offer for Golden Harvest, which would be conditional.” Murdoch has done business before with his partners in the deal. He sold his stake in the Hong Kong newspaper South China Morning Post to Kwok. And he bought Hong Kong-based Asian satcaster Star TV from Li’s family.
The sale of a stake in the company is not unexpected. Rumors have swirled for months that majors such as Polygram and Co-lumbia TriStar were in talks.
Not for sale
Golden Harvest’s venerable film production arm, which promoted the careers of Bruce Lee and Jackie Chan, is not a publicly listed company and is not part of the deal. The listed film distribution and cinema management arm does business in Hong Kong, Macau, Malaysia, Singapore and Thailand.
The company has been hit hard by the economic troubles pounding the region.
The share price had a 52-week high of HK$2.50 and now stands at HK52¢.
In the last half of 1997 the company lost HK$47 million ($6 million). That compares with a HK$5 million ($641,000) net profit in the same period a year earlier. The company attributed the red ink to foreign exchange losses in its primary markets as well as poor attendance at its films due in part to the proliferation of pirated copies.
Chairman Raymond Chow and the estate of co-founder Leonard Ho, who died earlier this year, control about half of the shares in the company.