New Zealand M&A Watch: Hoyts & Berkeley cinemas

aaron — Tue, 30 Mar 2010 03:53:08 +0000

Hoyts has applied to the Commerce Commission for clearance to acquire the business and assets of Berkeley cinemas. Berkeley operates a few cinemas in Auckland and so does Hoyts. There are a number of other competitors in Auckland including Village, Rialto and some independent cinemas. The application claims that the acquisition will not substantially lessen competition in any market because:

There are a large number of competitors already in the market and the merged entity will face intense competition from them.
Barriers to entry and expansion are low; a cinema is a commodity.
Consumers are highly price sensitive and also sensitive to quality differences.
There is a significant competitive threat from alternative forms of entertainment.
Film studios and distributors have countervailing market power.
The merged entity will be better able to fund the costs of converting its cinemas to digital technology.

New Zealand mergers & acquisitions activity

aaron — Wed, 17 Mar 2010 08:15:08 +0000

I made this graph today showing the number of merger and acquisition applications to the New Zealand Commerce Commission.

Over the past ten years there has been a reasonably steady level of applications of about 20 per year, except for the big drop in 2009. Since in a recession there should be as much or more demand for mergers than usual, this suggests that most of the applications in the recent past were for acquisitions rather than mergers. I also wonder what was the driver of the high level of applications in the early 90s.

Aaron Schiff » Competition Policy

New Zealand M&A Watch: Hoyts & Berkeley cinemas

New Zealand mergers & acquisitions activity