(Adds background, details on offer, analyst comment, shares)
By Devika Syamnath
Dec 19 (Reuters) - Australia's Village Roadshow Ltd VRL.AX said a homegrown private equity firm has offered A$761.2 million ($516.55 million) for the entertainment firm that backed films such as 'Joker' and 'The Matrix' trilogy, sending its shares more than 21% higher.
The company said its top shareholder Village Roadshow Corp Pty has entered into a call option for about 19% of its issued shares with an associate of the bidder Pacific Equity Partners Pty (PEP).
In Australia, 19.99% is the biggest shareholding an entity can own in a company before being required to make a formal takeover offer.
PEP declined to comment on the offer.
A deal would allow PEP to take control of a firm that has several Hollywood blockbusters under its banner, but has been struggling with a string of losses amid executive spats and cash crunch.
"This takeover comes at a time when there's been some speculation in the media regarding disagreements amidst the Roadshow board members," said James McGlew, executive director of corporate stockbroking at Argonaut.
One of the two brothers who own the company, John Kirby, wanted to sell the film production business and remove longtime Chief Executive Graham Burke, according to a report by the Sydney Morning Herald in January.
His brother Robert Kirby had opposed the move, but when Burke decided to depart in February, it "ruffled the feathers of some board members", McGlew said.
"It may well be that they (the board) have lost the will to fight this internally and perhaps the best way is to do it elsewhere and with a decent price on the table," he said.
McGlew said the investment firm has picked its timing well.
The shares of the company closed at A$3.89, just short of the indicative bid price of A$3.90, a premium of 21.9% to Village Roadshow's Wednesday closing price.
The company said on Wednesday it was ready to share due diligence information with PEP, which was willing to offer full cash or a combination of cash and scrip in a newly formed acquisition entity.
The investment firm had in 2007 picked up cinema chain Hoyts from a consortium that included casino billionaire James Packer, only to sell it to a Chinese investor seven years later.
Village Roadshow, in addition to co-producing and co-financing movies, operates theme parks and cinema exhibitions.
($1 = 1.4736 Australian dollars)