mm2 Asia proposes to merge its Cathay cinema business with Golden Village cinemas

mm2 Asia has entered into a heads of agreement with Orange Sky Golden Harvest Entertainment (Holdings) (OSGH), proposing to merge its cinema business with Golden Village cinemas.

Through its unit mm CONNECT, mm2 Asia owns eight cinemas in Singapore under the Cathay brand, and 14 cinemas in Malaysia under the Cathay Cineplexes Malaysia, Mega Cinemas and Lotus Fivestar brands. mm CONNECT also owns a movie film distribution business and an online streaming business.

OSGH has 14 cinemas in Singapore under the Golden Village banner.

The move will make the enlarged business the biggest cinema operator in Singapore, delivering economies of scale; it will also provide greater financial and operating stability, given headwinds faced by cinema operators due to the pandemic, said mm2 Asia.

In a statement to the Singapore Exchange on Wednesday, mm2 said that the duo will pursue a possible merger of the two cinema businesses, "on the basis that the parties will bring in one or more new investors to inject capital into the merged businesses".

The proposed transaction will require the necessary approvals, including that of the shareholders of the two companies, the Singapore Exchange, the Stock Exchange of Hong Kong and the Competition and Consumer Commission of Singapore (CCCS).

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If the terms of the definitive agreements cannot be agreed upon, or the conditions of the proposed transaction satisfied, by Dec 31, 2021, the heads of agreement will be terminated.

This month, mm2 Asia had said that it was evaluating a spinoff of its cinema business via a listing on the SGX Catalist board. "That spinoff is being proceeded with in parallel with the work on the proposed transaction," it said.

"In the event that the IPO is completed successfully, mm2 Asia and OSGH will discuss in good faith the basis on which the merger and the proposed transaction would take place, taking into account the listed spinoff business."

Shares in mm2 Asia closed at 16 Singapore cents on Wednesday, up 1.27 per cent or 0.2 cent.