Cineworld Group PLC (LSE:CINE) shares soared 21% on Monday following reports that Vue International, Europe's biggest privately owned cinema operator, has lined up financial backing from its new shareholders to help assemble a takeover tilt at Cineworld, its stricken rival.
Sky News has learnt that funds managed by Barings and Farallon Capital Management have agreed to provide capital to Vue International to support strategic acquisitions.
City sources said that Vue, with support from the two funds, would be among the bidders for Cineworld ahead of a deadline set by the latter's advisers later this week.
Cineworld, which is listed in London and like Vue ranks among Britain's biggest cinema chains, has filed for Chapter 11 bankruptcy protection in the US, and is now running a formal auction of its assets.
Last month, the company announced that it would "run a marketing process in pursuit of a value maximizing transaction for the Group's assets, focused on proposals for the Group as a whole".
"Cineworld has not initiated and does not intend to initiate a separate marketing process for the sale of any of its assets on an individual basis."
Shares in Cineworld are up 21.40% in London on Monday at 5.15p.