A courtship fit for the silver screen

Elizabeth Fournier
WHEN Doughty Hanson snapped up Vue for £450m a little over two years ago, a jilted lover was left waiting in the wings.

Canadian private equity fund Omers may have come second in the race for Vue back in 2010, but yesterday it proved its passion for the cinema chain is unwavering – pitching up with a rose between its teeth and a £935m dowry to convince Doughty Hanson to let it go.

Against the odds, cinema businesses seem to be a hot ticket right now. Admissions have been steadily growing since their mid-1980s low of 54m visits a year (having peaked at a huge 1.6bn annual visits in 1946) to hit 171m in 2011. At the same time above-inflation ticket price hikes mean revenues have ballooned – tripling since 1995 to bring in £1.3bn as a whole in 2010, the most recent data available from the BFI.

With the Guy Hands-owned Odeon & UCI chain already on the block, and listed rival Cineworld flexing its muscles by snapping up Picturehouse (a deal currently mired in regulatory delays), consolidation in the sector is clearly rife. No wonder private equity is so enamoured.

As Doughty Hanson has proved, if you invest in a fast-growing firm the returns can be red-carpet worthy. Omers will be hoping to prove the sequel is just as successful.