Film-Tech Forum ARCHIVE: UK: Odeon Cinemas bought by Terra Firma

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Posted by Dan Harris (Member # 1759) on 08-27-2004, 05:47 PM:

quote:
Terra Firma beats rivals to Odeon and UCI
Fri 27 August, 2004 22:30

By Pete Harrison

LONDON (Reuters) - Private equity firm Terra Firma Capital Partners has made a
sweeping move on the cinema sector, buying two of the country's largest cinema
chains, Odeon and UCI.

The two high-profile acquisitions for undisclosed amounts give Terra Firma,
headed by British financier Guy Hands, a presence in cinemas across Europe as
well as a number of theatres in sought-after central London.

"UCI meets our investment strategy perfectly, providing us with the opportunity
to add value through both operational and strategic change," said Hands. "We
also believe that there are exciting opportunities to develop Odeon further," he
added.

Terra Firma declined to discuss what it paid for the two chains, but the Odeon
sale had been expected to fetch more than 380 million pounds and Terra Firma was
initially reported to have bid 400 million pounds for UCI.

Cinema chains have become hot property for buyers on both sides of the Atlantic
in recent months, particularly with private equity firms which are attracted to
the sector because of its prime real estate and steady cash flows.

The high-profile auction of Odeon was sparked in June after Iranian property
investor Robert Tchenguiz failed to get other shareholders to accept his
pre-emptive offer of 360 million pounds.

Terra Firma beat off Tchenguiz and U.S. buyout giant Blackstone to buy Odeon,
which has theatres in London's Leicester Square and Kensington.

The sale of UCI by U.S. media companies Viacom and Vivendi Universal has been
dragging on since February. It is one of the leading multiplex cinema groups in
Europe with operations in Britain, Germany, Austria, Ireland, Spain, Portugal
and Italy.

Terra Firma said the deal to buy UCI would not include the venture's operations
in Japan, Brazil and Taiwan.

The sale had been held up by complications over cinema leases in Germany and
Austria.

A Terra Firma spokesman said completion of the acquisition would be conditional
upon various technical regulatory filings and consents in Germany, Austria,
Spain and Italy, which were expected within the next ten weeks.

U.S. investment bank Merrill Lynch had been appointed to find the buyer for UCI,
while Goldman Sachs and Citigroup handled the Odeon sale.

Lazard advised Terra Firma on the Odeon deal and Citicorp advised it on the UCI
deal.

Link to the article
Yahoo UK Finance

So, speculation time, will they merge UCI into ODEON (being the larger chain) or keep the two chains distinctively separate?

Dan

Posted by Leo Enticknap (Member # 534) on 08-28-2004, 03:38 AM:

Agreed that if they do merge the chains, it'll be under the Odeon name, given that (i) it has greater recognition, as the first one opened in 1931 - an urban legend holds that the name is an acronym standing for 'Oscar Deutsch Entertains Our Nation' - after the Hungarian immigrant who founded the chain in Birmingham; and (ii) as you say, there are a lot more Odeon sites in existence, so the cost of any rebranding exercise would be cheaper doing it that way.

It'll be interesting to see what happens in towns which have both an Odeon and a UCI. The scenario is usually a loss-making city centre Odeon and a ring-road UCI multiplex, e.g. Edinburgh. While our multiplex isn't a UCI, we do have a loss-making city centre Odeon in York which the local paper have been running a campaign trying to 'save', and which Odeon's previous owners reputedly want to close because the [imagine political adjective here if forum rules allowed me to write it!] council won't give them planning permission to refurbish the place (specifically, to stick a new-style Odeon neon sign on the exterior). The only probable reason why they haven't closed it already is because they know they wouldn't get planning permission to do anything else with the site and it's probably just about cheaper to keep running the place on a shoestring than to maintain an empty building which they can't sell.

Personally I wouldn't shed many tears at the York Odeon going, because we already have another excellent city centre cinema, the building is run down, the presentation is abysmal and there are other examples of that sort of cinema architecture in far better condition elsewhere (including one only 40 miles down the road in Scarborough). But it would be sad if the new owners begin a systematic process of closing down the 1930s town and city centre Odeons.