Village Roadshow Limited has paid $254 million to buy out its joint venture partner Warner Bros in seven major Australian theme parks.
In the strategic move, Village takes control of the jointly owned Australian Theme Parks and around $64.5 million bank debt.
The buy out will be funded by a drawdown on Village’s bank facilities and from its existing cash reserves.
Village now takes 100% ownership of Warner Bros. Movie World; Sea World; Wet ‘n’ Wild Water World; Australian Outback Spectacular; Paradise Country; Sea World Aviation and Warner Roadshow Studios.
Village will also move to a 50% ultimate ownership interest in the Sea World Nara Hotel.
According to Village, they will continue to partner with Warner Bros. in theme parks in Australia through a long term licensing agreement.
The transaction also provides for VRL to explore with Warner Bros. theme park opportunities in Asia. 100% control of the assets means VRL will be able to pursue marketing synergies and consolidation savings.
Chairman of Village Roadshow Robert Kirby said the deal is ultimately about growth.
“Over the medium to long term this transaction will strengthen our partnership with our friends at Warner Bros. as we explore the exciting potential for Warner branded parks in Asia,” Kirby added.
“These and other growth opportunities will become possible by the fact that there is no one better than our team in building and operating theme park attractions in the world.”
Chairman of Warner Bros Barry Meyer added that for his group the transaction makes perfect sense.
“Through our ongoing licensing deal with Village Roadshow, we’ll be able to continue to benefit from their experience and expertise in the theme park arena and maintain a presence in the business. It’s a win-win situation for both of our companies.”
Village said that overall it expects the transaction to be incrementally cash flow positive after all interest and reinvestment costs.
Due to depreciation changes within the Warner Bros. entities to be acquired however, the acquisition will initially be EPS negative on the group. It is anticipated that the transaction will close in early July.
By Adam Parsons
