Hoyts Group may drop the cinema group’s iconic century-old name for a new corporate identity to attract investors in a $700 million float on the local stock exchange.
The group, which is owned by a group of funds advised by Sydney-based private equity firm Pacific Equity Partners, is planning to launch an IPO late this year or early next year, as first reported by The Australian in February.
The timing of the float is aimed to capitalise on the prospect of a strong box office lasting at least two years as Hollywood studios prepare to release a raft of big budget movies including the latest instalments in the StarWars, Batman, Superman and Avatar franchises.
The Australian can also reveal that investment banks UBS and Macquarie are in the box seat to handle the listing, with Citi also in the running. PEP has received proposals from investment banks including Credit Suisse.
Some of the proposals have suggested Hoyts adopts a new name to stimulate interest from institutional and retail investors mirroring a similar move by Publishing and Broadcasting Limited, the media company once owned by the Packer family which rebranded as Nine Entertainment in 2010 ahead of a float.
If the Hoyts name disappears, it will vanish with a rich history that began in 1908 when Australian dentist Arthur Russell began showing movies at St George’s Hall in Melbourne.
The company was named after Hoyts Circus, an American travelling circus with which Russell had travelled as its resident magician. In 1926, Hoyts merged with two other companies — Electric Theatres and Associated Theatres — to become Hoyts Theatres Limited.
The merged group, in which the Fox Film Corporation of the US took a major shareholding, grew into a local empire and expanded overseas in the 1980s through an ambitious growth agenda that saw the group open theatres in Mexico, Austria, Germany, Britain and in South America through a joint venture.
The late Kerry Packer’s Consolidated Press Holdings bought Hoyts in 1999 for $405m, and in 2005 the group was sold to Packer’s other company, PBL, and West Australian Newspapers, with both companies taking a 50 per cent stake.
In 2007, PEP acquired the 50 per cent stakes in a deal that valued the company at $440m. The float is expected to value Hoyts at eight times earnings.
The group operates 43 cinemas across Australia and New Zealand as well as the Hoyts Kiosk DVD distribution chain, and cinema advertising business Val Morgan, which has been a dramatic success under Hoyts chief executive Damian Keogh’s leadership. Mr Keogh was recently appointed chief executive of Hoyts and will front the float, in which a movie streaming service will be sold to potential investors as a new source of earnings.
The service is said to be on track to launch later this year with transaction and subscription video on-demand components that will build on the company’s DVD kiosk business.