mm2 Asia announced that they have signed a binding term sheet to acquire 13 cinema locations in Malaysia from Lotus Fivestar Cinemas for a purchase consideration of RM118 million. The 13 cinema locations comprise a total of 90 screens with a total of 15,818 seats. With the completion of the acquisition, mm2 Asia will own a total of 133 cinema screens in Malaysia, making it the fourth largest cinema operator in the Malaysian market. The cinemas comprised in the business were established between 2009 and 2016, and currently, comprise a total of 90 screens with a total of 15,818 seats.

The rationale is in line with mm2 Asia’s intention to diversify into the downstream value chain of film production. Mm2 Asia believes this will complement its current and future businesses, strengthening its competitive advantage through the ownership of cinemas, as well as providing a source of recurring income to mm2 Asia. mm2 Asia agreed to pay up to RM118 million in purchase consideration which comprises RM1.5 million in cash on the signing of the term sheet and additional RM1 million on signing of the sale of business agreement.

The outstanding amount of the purchase consideration will be paid out in three tranches. mm2 Asia will pay the first tranche payment of RM98 million less the initial RM1.5 million in cash within 30 days on completing the proposed acquisition. The second and third tranches form up to RM10 million each is joined to targets set during second and third years of the business being acquired. mm2 Asia received the acquisition to offer the option to purchase the film screening and/or exhibition business of Lotus Fivestar at two cinemas in Terengganu and Sandakan.