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mm2 Asia offers RM118m for 13 Malaysian cinemas from Lotus Fivestar Cinemas
MM2 Asia announced after Tuesday trading hours a RM118 million (S$38.9 million) acquisition bid for the management and operations of 13 cinema locations from Malaysia's privately owned Lotus Fivestar Cinemas.
mm2 Asia said that with the acquisition, it will own 133 cinema screens in Malaysia and become the fourth largest cinema operator in the country.
The acquisition is in line with the diversification into the downstream value chain of film production, the listed company said.
mm2 Asia agreed to pay up to RM118 million in purchase consideration comprising RM1.5 million in cash on signing of the term sheet and another RM1 million on signing of the sale of business agreement.
The remaining of the purchase consideration will be paid out in three tranches. mm2 Asia will pay the first tranche payment of RM98 million less the initial RM1.5 million in cash within 30 days on completing the proposed acquisition.
The second and third tranches involving up to RM10 million each are tied to targets set during second and third years for the business being acquired.
mm2 Asia has secured with the acquisition offer the option to purchase the film screening and/or exhibition business of Lotus Fivestar at two cinemas in Terengganu and Sandakan.
Assuming that the acquisition was completed on March 31 2016, the transaction would raise the listed company's net tangible asset per share on a pro forma basis to 8.89 cents, up from 5.17 cents. Earnings per share will increase to 0.81 cent from 0.77 cent.