Sydney Attractions Group, the Australia-based company whose portfolio includes Sydney Aquarium, Sydney Wildlife World and Sydney Tower, has recommended that shareholders reject a takeover offer made by Village Roadshow, claiming it ‘substantially undervalues’ the company.

On 5 September Village Roadshow announced a cash offer of AUS$6.01 (US$5.20, EUR3.70, £2.60) per share to acquire all of the outstanding shares in Sydney Attractions Group that it does not already own. It currently holds 19.96 per cent of the company’s issued shares.

The offer values the group at AUS$197.9m (US$171.3m, EUR121.6m, £84.8m).

Village Roadshow’s CEO, Graham Burke, said: “Sydney Attractions Group is at a critical point given the ongoing difficulties and heightened competitive pressures it faces.

“As theme park and attractions operators, we are more confident of being able to deliver the required result with direct control rather than as a passive investor.

“If Village Roadshow acquires Sydney Attractions Group, we will undertake a detailed review of operations to identify initiatives to improve performance.

“We believe that some of these initiatives may be more challenging for Sydney Attractions Group to implement itself, given its high gearing and therefore more constrained financial capacity to invest in the business.”

Bill Wright, chair of Sydney Attractions Group, called the takeover ‘opportunistic’.

“Sydney Attractions Group is positioned for strong earnings growth over the next few years particularly as Sydney Wildlife World ramps up,” he said in a letter to shareholders.

“This is an opportunistic offer made before the full contribution of the company’s new businesses becomes apparent to the market.

“Our core businesses are high quality and uniquely located almost in the heart of Sydney. They could not be easily replicated. They offer exposure to the long term growth of inbound tourism with high margins and strong stable cash flows. Shareholders should not sell them at undervalue.”