Quickflix shares in trading halt amid takeover speculation

Quickflix said it planned to release an update regarding a potential corporate transaction with an international party. Australian streaming and DVD rental business Quickflix has ignited rumours of a takeover after entering a trading halt on Thursday ahead of a potential acquisition.
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The struggling Perth-based business last traded at 0.002¢ after requesting a trading halt “pending release of an update regarding a potential corporate transaction with an international party which may result in an acquisition”.

Stephen Langsford, the company’s founder and chief executive, did not return calls.

The release does not specify if the potential acquisition would be made by Quickflix or whether the international party would purchase part, or all of the local streaming company.

However, with little cash in the bank, speculation is rife that Quickflix will be the subject of a takeover bid.

At its last quarter update in April, Quickflix had just $1.26 million in the bank, down from $2.4 million at the beginning of calendar 2015. In May, it raised a further $775,000 with the identity of the “professional” investors undisclosed.

Any sale of Quickflix may be complicated thanks to a warrant held by Nine Entertainment after it acquired around 8 per cent, or 83.3 million shares, of the business from HBO for $1 million, which entitles the broadcaster to a $10.5 million payout in the event of a merger on sale, on top of the shares in owns.

Quickflix has a market capitalisation of $4.4 million.

Quickflix has had just 123,553 million paying customers in the last quarter. However, the company does not comprehensively break down its streaming and DVD customers. Rather it states that 75 per cent of its customers have “access to streaming”.

In May, Quickflix brokered a deal to become a reseller of content for Presto, a joint venture streaming service between Seven West Media and Foxtel. It kept its pay-per-view and DVD businesses.

The local player, which listed on the Australian Securities Exchange in 2005 has struggled with the entry of new players into the subscription video on-demand space.

Dominated by US-based Netflix, 2015 has seen streaming services grow rapidly in popularity. Stan, which is a 50-50 venture between Nine Entertainment and Fairfax Media – publisher of The Australian Financial Review, and Presto are thought to hold the second and third positions in the streaming hierarchy.

While none of the three providers publish subscriber numbers, estimates put the total figure at 2 million.

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