The move will see mm2 acquire Cathay Cineplexes’ eight cinemas across Singapore, comprising 64 screens, or 11,569 seats. The mainboard-listed company said it would retain employees of Cathay Cineplexes.

The deal to buy Cathay Cineplexes comes after Hong Kong’s Orange Sky Golden Harvest Entertainment (Holdings) blocked mm2’s bid to take a 50 per cent stake in Singapore’s Golden Village cinema business in a deal valued at S$184 million (Bt4.48 billion).

The acquisition, mm2 Asia said in a pre-market filing, is a “strategic investment by the group in line with the group’s overarching strategy to diversify into the downstream value chain of film production”, and will be funded entirely through internal funds and borrowings.

It will pay S$230 million in cash for the acquisition comprising a S$15 million deposit, with the remaining S$215 million to be paid six months after the deal’s closure.

Cathay has issued and paid-up share capital of S$5 million comprising five million ordinary shares, 48.85 per cent of which are owned by Equus Holdings, and 51.15 per cent owned by Choo Meileen, Cathay’s managing director and the granddaughter and niece of Cathay Organisation’s founders.

The consideration takes into account Cathay’s adjusted earnings before interest depreciation and amortisation (Ebitda) of S$16.66 million for the financial year ended December 31, 2016, and estimated future revenue of S$21 million from Cathay’s new seven-screen Parkway Parade complex, which began operations in September this year.

The intrinsic value for the Cathay Cineplexes brand was also taken into account, estimated to be between S$24 million and S$30 million.

In the announcement, mm2 said that the group’s cinema business acquisitions were undertaken to add an additional source of recurring income and growth, and in July this year, it received shareholder approval to diversify into the cinema management and operations business. Aside from the impending deal, the group has also completed the acquisition of cinema-related businesses in Malaysia and Hong Kong.

Executive chairman of mm2 Asia, Melvin Ang said that the Cathay name was very much a part of Singapore’s history, and that he wants to “zealously protect” the Cathay Cinemas’ legacy, and realise Choo Meileen’s vision for Cathay Cinemas to be “one of the major film exhibitors in the Asian market”.