CJ CGV, the Korean movie theaters giant, is to raise $286 million from the sale of a slice of its Indonesian, Vietnamese and Chinese businesses.
The company, which has its own stock market listing and is affiliated to the CJ Group, which includes CJ E&M and CJ Entertainment, said this week that it had sold a 29% stake in CGI Holdings to financial investors MBK Partners and Mirae Asset Daewoo. The move is understood to be the precursor of an IPO of the overseas businesses on the Hong Kong Stock Exchange.
The sale price implies a valuation of $986 million. That compares with a recently stated enterprise value of $1.3 billion.
CJ CGV said that the share sale would help reduce its own heavy indebtedness, to 436% of its assets. The deal is expected to be completed in the last week of December.
“Investors acknowledged the growth potential of our business in the Chinese, Vietnamese and Indonesian cinema markets,” said Hwang Jae-hyeon from CJ CGV’s communication team. According to a recent CJ CGV regulatory filing, the company has 1,059 screens in China, 453 in Vietnam and 366 in Indonesia.
Korean financial media has reported that CJ CGV previously tried to sell a stake in its Chinese cinemas business, but found no buyers on terms that it deemed acceptable. The current political strains between China and Korea would have been a likely factor.
To get to the point that it could make the CGI stake sale CJ CGV first had to include the Indonesian and Vietnamese businesses. By the end of November it will complete an $85 million share purchase that give it 100% of CGV Vietnam, and another with $72.9 million that buys out the 23% minority stake in Graha Layar Prima, its Indonesian joint venture. CGI will also merge with CJ CGV’s Hong Kong business.