The acquisition will further consolidate the UK’s cinema landscape, giving the country’s three biggest operators – Cineworld, Vue and Odeon – more than two-thirds of the market.
Cineworld said it would continue to run Picturehouse as a separate entity, keeping the brand and the character of the chain, whose 21 cinemas cater to a more upmarket, mature, audience.
Cineworld’s finance director, Philip Bowcock, said the purchase would give the company – which typically operates large multiscreen cinemas – a reach in smaller areas. “It gives us the opportunity to open a cinema wherever, we have got a product that can do it from the biggest to the smallest,” he told City A.M., adding that Cineworld’s backing would allow Picturehouse to open 10 more planned outlets.
The City welcomed the deal yesterday, sending Cineworld’s shares up two per cent. It funded the deal partly through a £16m share placing.
“Independent cinema often appeals to an older and more affluent customer base and, with an ageing population, should become an increasingly important segment of the market,” Peel Hunt’s Nick Batram said yesterday.
Picturehouse is the trading name of City Screen Group, whose major shareholders were chief executive Lyn Goleby, and venture capital firms Arts Alliance and Albion Ventures. Albion said it had more than doubled its investment in City Screen since it first invested in 1999.
ADVISERS PICTUREHOUSE’S BLOCKBUSTER SALE
International mergers and acquisitions firm Livingstone Partners were corporate financial advisers to City Screen – which trades as Picturehouse – on its £47.3m sale to Cineworld. The team working on the deal was headed up by director Christopher Jones, who is co-head of Livingstone’s consumer team. His recent transactions include the sale of business travel management company Reed & Mackay, the recapitalisation and subsequent sale of the online travel agent Iglu.com and on the sale of Screen Cinemas to Everyman Media Group. He joined Livingstone from Ernst & Young in 2005. Jones was joined on the team by Simon Cope-Thompson, who advised on October’s £76m sale of Marwyn Gaming to Merkur Casino UK. Cope-Thompson joined from Arthur Andersen in 1994.
Cineworld was advised on the deal by their house brokers JP Morgan Cazenove, with the team led by managing director Rupert Sadler, who also worked on CWC’s sale of its Monaco & Islands operation, which was announced earlier this week. The Cambridge graduate previously worked at Rothschild, and was joined by Nicholas Hall on the acquisition. Olswang acted as legal advisers to Cineworld while Marriott Harrison were legal advisers to City Screen.