Cineplex Odeon Puts Call Out for Bidders, Offers Data

Cineplex Odeon Corp., North America’s second-largest movie theater company, formally went on the auction block Thursday with the announcement that financial data has been assembled for interested bidders.

The action--initiated by a special committee of Cineplex directors--is the upshot of a fierce battle for control waged two months ago by Cineplex’s co-founder and chairman, Garth H. Drabinsky. The auction appears certain to be a hot topic at Cineplex’s twice-postponed shareholder meeting, now set for June 30 in Toronto.

Drabinsky made an unsuccessful attempt this spring to circumvent his largest shareholder, MCA Inc., by making a deal to buy out a stake held by the Bronfman family of Canada. Had he succeeded, Drabinsky and his associates effectively would have gained control of the company without making a similar offer to other shareholders.

The Drabinsky move was bitterly opposed by MCA, however, and failed to win Canadian regulators’ approval. By the end of April, the Bronfmans joined with MCA to set up the independent committee of directors to find a way to maximize shareholder values. MCA and the Bronfmans together own 65% of the company’s equity.

The independent Cineplex committee recently hired two investment banking firms, RBC Dominion Securities Inc. and Morgan Stanley & Co., to advise the committee on the financial options open to the company.

Although Drabinsky indicated six weeks ago that he would attempt to take the company private, no proposal has materialized.

“Garth is just one competitor in the process,” said one executive close to Cineplex.

The independent committee issued a statement Thursday, after the close of stock market trading, indicating that a wide range of proposals will be entertained. It appears that a bidder could make an offer for the company’s stock or its assets, or possibly bid for pieces of the company, including its valuable movie theaters in the United States. Cineplex has about 1,818 screens in 489 locations.

In composite New York Stock Exchange trading, Cineplex Odeon shares closed at $13, down 50 cents, on volume of 204,900 shares.