The parent company of Cathay cinemas, mm2 Asia, is currently in talks with Golden Village cinemas’ parent company Orange Sky Golden Harvest Entertainment (Holdings) Limited (OSGH) about a potential merger.
Mm2 Asia is Singapore-listed and owns eight cinemas in Singapore under the Cathay brand. It also owns 14 cinemas in Malaysia under the Cathay Cineplexes Malaysia, Mega Cinemas and Lotus Fivestar labels.
Meanwhile, Hong Kong-listed OSGH operates a total of 35 cinemas across Hong Kong, Taiwan and Singapore. In Singapore alone, it has 14 Golden Village cinemas.
Currently, the merger deal faces several hurdles.
It needs to get approval from both mm2 Asia and OSGH shareholders, Singapore Exchange (SGX) and Hong Kong Exchange, as well as relevant government authorities such as the Competition and Consumer Commission of Singapore.
To add on, the heads of agreement will be terminated if the terms cannot be agreed upon, or the conditions of the proposed transaction satisfied, by 31 December 2021.
However, if the deal goes through, the new combined cinema operator would be the largest in Singapore.
A Merger Will Help To Overcome COVID-19 Related Challenges
Should the merger go through, the two companies aim to bring in new investors to inject more capital in to the combined business.
A merger with Golden Village would give both cinema businesses “more financial and operating stability,” said mm2 Asia in a filing with SGX.
Both cinema operators have faced hefty challenges in running their businesses since the outbreak of the Covid-19 pandemic.
Entertainment venues in Singapore, including cinemas, were forced to close for close to four months due to the pandemic.
Although cinemas have reopened since July 2020, they have not been able to operate at full capacity due to social distancing measures and a limit on total capacity.
Furthermore, most people have turned to content streaming applications such as Netflix, which has led to a general disruption of the movie and cinema industry.
According to The Straits Times, Golden Village Singapore made a loss of HK$16.9 million (S$2.9 million) from January to June this year.
This has prompted the cinema operator to diversify into other revenue streams, such as launching a first-of-its-kind work-from-lounge concept in its Gold Class Lounge.
Meanwhile, mm2 Asia sank to a net loss of S$22.4 million from January to September this year. In the year-ago period, it made a profit of S$9.18 million.
Mm2 Asia also said that all the parties involved are in the midst of negotiating the financial terms.
“The merger would therefore result in a stronger platform for the operation of the cinema business,” said mm2 Asia.
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