Chinese investor buying Korea's Megabox cinema chain, say reports

HONG KONG -- A Chinese investment firm has acquired a major stake in South Korea's third ranked cinema chain Megabox.

According to local reports, Oriental Star Capital is to pay $515 million (KRW570 billion) for the 50% stake in Megabox held by Korea Multiplex Investment, a group of investors headed by Australian banking and funds group Macquarie.

JContentree Corp., a Korean media group, holds a 46% stake and now has 30 days to either beat Oriental's offer or sell its shares.

Megabox has a roughly 20% share of the Korean exhibition market and was previously part of a vertically integrated group with the Showbox production and distribution company. Showbox still owns a small circuit of Megabox-branded cinemas in China.

The deal comes only days after Korea's Free Trade Commission fined the two market leaders CJ-CGV and Lotte Entertainment for unfair competition, in particular to how the exhibition firms favoured movies from their affiliated distribution companies.

Oriental Star is understood to have been an investor in the telecoms, media and entertainment sector, including games. It is not clear whether the firm is seeking to buy the Korean company as a long term investment or whether it is acting as a stalking horse for the ultimate owner.

Other recent Chinese moves in the Korean entertainment space have included Zhejiang Huace's stake buy in the recently floated distributor and producer Next Entertainment World. Another Chinese investor was this month announced as buying Hoyts, Australia's number two cinema chain.

Neither Macquarie or Megabox responded to calls from Variety.

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