The founding family that has run the historic home-grown Cathay movie theatre chain for more than 80 years is selling its local cinema operations for $230 million.

Cathay Organisation's Cathay Cineplexes unit will become part of the expanding operations of entertainment company mm2 Asia, the backer of local films such as director Jack Neo's Ah Boys To Men.

Under the terms of the deal announced yesterday, Cathay cineplex staff will stay on after the sale, which is expected to close by Nov 24.

The move will add eight theatres to mm2 Asia's portfolio, which now comprises 19 cinemas in Malaysia.

The hefty price tag includes the rights to the Cathay brand name, which was valued at between $24 million and $30 million.

Cathay Organisation managing director Choo Meileen, 67, said the decision to sell the cinema chain was "very difficult". Ms Choo, the niece of Cathay co-founder Loke Wan Tho, said the cinema business has weathered many storms in the past eight decades. "However, the environment has changed, and for an entertainment company to survive today, it needs to extend its reach broadly," she added in a statement.

One industry expert said the deal could be a shot in the arm for the local movie industry, especially amid declining cinema audiences.

Associate Professor Ang Swee Hoon, from the National University of Singapore Business School, told The Straits Times: "In terms of the market, indeed there's a consolidation, but it's not just about fewer competitors. You also see each having their own niche.

"There are too many cinemas... so I wonder, for them to have eight here, if they are thinking of showing local or very regional movies."

mm2 Asia could bank on its production and distribution strengths by letting those films play only in its own cinemas, said Prof Ang.

The company's expansion into the Singapore cinema market is part of an acquisition strategy that began in 2015, and follows a takeover that year of Cathay's movie theatre business in Malaysia.

But this is the first time it will be paying for the rights to the Cathay name, which mm2 Asia group executive chairman Melvin Ang called "very much a part of Singapore's history". He noted in a statement that "our continued diversification from production to cinema operations is part of our strategic growth plan".

The Cathay deal sets the stage for sustainable growth for the company, DBS analyst Ling Lee Keng noted yesterday.

"This acquisition will complement its current cinema operations in Malaysia, and further cement mm2's status as the leader in the media and entertainment industry," he added.

mm2 Asia failed earlier this year in a $184.25 million bid for the Golden Village cinema chain here.

Hong Kong's Orange Sky Golden Harvest Entertainment (Holdings) blocked the attempt and eventually consolidated its own interest to take full ownership of the brand.