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Asia Pacific
Chinese tycoon buys Australia cinema chain
From the Financial Times of Tue, 23 Dec 2014 09:05:55 GMT
Hoyts Plaza Theatre Sydney

A Chinese property tycoon has bought Australia’s second-largest cinema chain in a deal that underlines mainland interest in expanding into entertainment overseas.

Hoyts Group said on Tuesday that it has been acquired by ID Leisure, a British Virgin Islands-based investment fund founded by Sun Xishuang, a Chinese entrepreneur.

Hoyts was sold for an undisclosed sum by Australia’s largest private equity group, Private Equity Partners, which declined to comment on the sale or the price tag.

Chinese property conglomerate Dalian Yifang Group, majority owned by Mr Sun, was not immediately available for comment but has said it will be making an announcement “when the deal is sealed”.

The Australian Financial Review newspaper reported on Tuesday that the Hoyts Group was believed to be worth as much as A$900m (US$730m) on an enterprise value basis. PEP bought Hoyts in December 2007 for A$440m.

As well as Mr Sun’s majority interest in Dalian Yifang Group, he is also a major shareholder in Dalian Wanda Commercial Properties. Both have their roots in the northern city of Dalian and are headquartered in the same Beijing skyscraper.

Dalian Wanda, which made a lacklustre debut in Hong Kong on Tuesday after last week raising $3.7bn in the city’s biggest initial public offering this year, is majority owned by Wang Jianlin, China’s second richest man.

Mr Wang also has a taste for foreign cinema holdings. In 2012 he bought AMC Entertainment , the second-largest theatre chain in the US, and has since made clear his interest in moving deeper into the entertainment business, bidding for a stake in US film studio Lions Gate Entertainment and seeking to invest in US movie producer Metro-Goldwyn-Mayer.

Last year Hoyts tapped US debt markets for US$450m, enabling the company to refinance its debt and pay a dividend to its private equity owners.

PEP had considered floating Hoyts before agreeing the deal with ID Leisure. It has been a busy year for the Australian private equity group, which also capitalised on a rebound in capital markets to sell its holdings in Spotless, an Australian cleaning and catering company.

Hoyts is the second-biggest cinema chain in Australia and New Zealand, and operates video rental kiosks in Australia as well as Val Morgan, the largest provider of cinema advertising in the region.

Damian Keogh, Hoyts Group chief executive, said he looked forward to the investment and development of the group under its new owners.

“Hoyts is embarking on a number of exciting opportunities and together with ID Leisure, we will continue to invest in the exceptional customer experience currently offered to 20m attendees annually,” he said. “Innovation and expansion will be a focus.”

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