SYDNEY — Kerry Packer gained effective control of Hoyts Cinemas on Tuesday after increasing his offer by 5¢ to $1.31 a share.
Packer’s bid via his privately held Consolidated Press Holdings (CPH) was made after Hoyts Cinemas board recommended shareholders reject his initial offer of $1.26 a share, branding it as neither “fair nor reasonable.”
Having acquired 17.1% of Hoyts through deals with San Francisco merchant bank Hellman & Friedman (H&F) and Lend Lease, Packer was able to lift his investment in Hoyts to over 30% when H&F agreed to sell its remaining 12.6% Hoyts holding and the original 12.6% optioned by CPH at the old offer of $1.26 as a package deal under the new bid price.
Hoyts’ recommendation to reject Packer’s first offer was based on an independent report from N.M. Rothschild & Sons. That report valued the exhib between $420 million and $471 million, at least 16% higher than the initial package.
The market in apparent agreement, Hoyts’ shares have consistently traded above $1.26 since the initial bid announcement with only a negligible 3¢ share price drop Tuesday in response to Packer’s upping of the bid ante.
The Hoyts’ board is expected to reject the new bid, likely after a board meeting skedded for today. However, analysts argue Packer now stands a good chance of gaining between 40% and 50% control of the exhib under the revised bid.