Buyout titan CVC screens rival offer for Cineworld assets

·2-min read

Cineworld, the world's second-biggest cinema operator, has been approached by the buyout titan CVC Capital Partners about a takeover of parts of the struggling group.

Sky News has learnt that CVC is in talks with Cineworld and its advisers about an offer for its operations in eastern Europe and Israel.

City sources said that CVC was vying with Elliott Management, the prominent activist investor, to acquire the assets, months after the cinema chain filed for Chapter 11 bankruptcy protection in the US.

CVC has been a prolific investor in leisure and entertainment businesses in the UK, having previously owned William Hill, the bookmaker, and Formula One motor racing.

It is said to have evaluated an offer for Cineworld several years ago.

Elliott's interest in Cineworld was revealed by Sky News at the weekend.

It was unclear on Monday whether other potential buyers were also circling the stricken group, which has seen its shares collapse by over 90% during the last year.

Neither CVC nor Elliott are currently pursuing offers that would encompass Cineworld's UK or US businesses.

Rival cinema operator Vue International was recently frozen out of the auction process after amassing financial backing for an offer.

In the UK, Cineworld trades under its parent's brand and owns the Picturehouse chain, while in the US it owns the giant Regal multiplex portfolio.

Elsewhere, it operates in Bulgaria, the Czech Republic, Hungary, Israel, Romania and Slovakia.

One analyst has estimated the value of Cineworld's operations outside the UK and US at about $500m.

The London-listed company, which floated in 2007, has warned that any deal to break it up is unlikely to yield value for shareholders.

Its market capitalisation now stands at just £32m.

Vue's founder, Tim Richards, had been attempting to engineer a tie-up between two of the UK's largest cinema operators, while the founder of Picturehouse was also in talks with him about buying it back as part of a break-up of Cineworld.

In a stock exchange announcement last Friday, Cineworld reiterated that it "remains in discussions with its key stakeholders with a view to developing a Chapter 11 plan of reorganisation that maximises value for the benefit of the Group and its stakeholders".

"The marketing process, which was announced on 3 January 2023, is continuing in parallel.

"As previously announced, it is not expected that any plan of reorganisation or sale transaction would result in any recovery for Cineworld's shareholders."

PJT Partners, the investment bank, is advising Cineworld on the sale process.

CVC declined to comment.