Everyman set to quit London stock exchange over investor pressure
Luxury cinema chain Everyman is set to drop its London listing over pressure from its shareholders, including an investment firm poised to trigger a takeover bid.
Everyman said on Tuesday that it is likely to recommend to its shareholders that it drops its listing on the challenger AIM market, sending its share price plummeting.
The up-market cinema brand appointed a new chief executive in April after its former boss, Alex Scrimgeour, announced his shock departure in December following a profit warning.
The firm said that three of its directors – Adam Kaye, Charles Dorfman and Michael Rosehill, who hold 45.6 per cent of its issued capital – have told the board that it should drop its AIM listing.
Private equity firm teeters on takeover threshold
The board added that it believes that there are further shareholders, accounting for at least 11 per cent of its capital, who want the cinema firm to quit the London Stock Exchange.
“The board believes it is likely that the company will proceed with proposing a delisting to all shareholders, noting it would be conditional on shareholder approval in accordance with the rules of AIM,” it said.
One of these board members, Michael Rosehill, is also a director of private equity firm Blue Coast Capital, which has amassed a more-than 29 per cent stake in Everyman.
Blue Coast would have to trigger an offer for the remaining shares if it reached 30 per cent equity, and analysts have speculated for months that it has been preparing for a bid.
“Blue Coast seems set on making a bid, no doubt intent on turning the company around,” IG’s chief market analyst Chris Beauchamp told Morning Wire.
“Everyman’s share price performance is a reminder that what has halved once can halve again, and again, with no end in sight for the decline without a clear turnaround strategy,” he added.
Everyman share price slump
The cinema firm’s share price took a wild ride on Tuesday, opening 43 per cent lower at 20.1p before recovering to around 35p. The stock has shed nearly 80 per cent of its value in the last five years.
The cinema chain’s plans to quit the AIM market “almost certainly” make it more likely that Blue Coast will make a play for the firm, according to Andrew Renton, research director at Cavendish.
The private equity firm could hoover up shares from investors who sell up to avoid having holdings in a private company, he told Morning Wire.
Renton said that Everyman could benefit from converting to a private company because this will afford it more time to implement its turnaround, but he added that “it’s not going to change the dynamics in the cinema market”.
Everyman has not turned a profit since 2019 and it posted a £10m pre-tax loss in the year to January, despite a nine per cent jump in revenue to £117m.
The company’s update on Tuesday revealed that it saw 23 per cent growth in admissions and a 27 per cent jump in revenue to £59m in the 21 weeks to May, boosted by releases like Wuthering Heights, Michael and The Devil Wears Prada 2.
But Beauchamp said the cinema chain “will have to work harder to maintain its premium appeal, given the changes made by bigger rivals,” who have expanded into luxury and dine-in experiences in recent years.
Everyman appointed Farah Golant as its permanent chief executive in April, after she had taken over from Scrimgeour on an interim basis.