Star Media Group Bhd’s board has given the approval for the sale of its entire stake in Singapore-listed Cityneon Holdings Ltd, a unit that is currently contributing about one-third of its revenue.
This decision comes a week after the Star Media Group announced that its wholly-owned subsidiary Laviani Pte Ltd, has received a proposal from Singaporean legal firm Bird & Bird ATMD LLP, which notes its client’s interest in purchasing the entire equity interest in Cityneon.
Established in 1956, Cityneon is a full-service ideas agency with five integrated business segments which include events, exhibitions, experiential environment, interior architecture, and intellectual property rights (IPR).
The IPR segment was created through the acquisition of immersive attractions company Victory Hill Exhibitions Pte Ltd in 2015, which has allowed it to own the exclusive rights to hold the successful Transformers Experience and Marvel Avengers S.T.A.T.I.O.N interactive exhibition.
This has been a major drive to the Star’s bottom-line growth when its subsidiary acquired Cityneon’s stake two years ago.
The service provider of creative solutions has been the second largest revenue contributor to Star Media whereby it contributed 32.2% and 25.2% of the group’s revenue and earnings respectively before interest and tax (EBIT) in FY16.
The Malaysian media company currently holds 128.5 million ordinary shares, representing an approximate 52.5 percent of the issued share capital in Cityneon.
The transfer will allow Star Media Group to unlock the value of its investment in the republic, as the deal is expected to bring in more than MYR 350 million (about US$80.49 million) to the media group’s cash coffer.
“Star will see its coffers rise more than MYR 350 million if the deal goes through. It will take decades to earn that kind of money,” said a source from Singapore.
However, the stake sale has also raised a question to the group’s earning growth moving forward, as it will lose one of its diverse, key contributor in its investment portfolio.
Cityneon has earlier on 5th of May, requested for an immediate suspension of its share trading on the Singapore Exchange. Its shares were last traded at 95.5 Singapore cents, giving the company a market capitalization at S$233.6 million (about US$165 .8 million).