Vue owners get fairytale ending with £935m sale

CINEMA chain Vue announced plans to change hands for £935m yesterday, with the firm’s chief executive promising that its new backers would enable it to double in size within two years.

Private equity firm Doughty Hanson sold the operator, the UK’s second biggest, to Canadian investors Omers and Alberta Investment Management Corporation (AIMCo) in a deal that more than doubled Doughty Hanson’s £450m outlay from 2010.

When Doughty Hanson purchased Vue three years ago, the company operated around 70 cinemas in the UK, but has since expanded to 146 with sites in Ireland, Germany and five other European countries, as well as Taiwan.

“We have doubled the size of the estate and plan to do that again in the next 12, 18, or 24 months,” Tim Richards, Vue’s Canadian chief, told City A.M. “Europe was where the US was 10 years ago in terms of being ready for consolidation and we are leading the charge there.” He said Vue would look for acquisition opportunities, both in the markets it currently operates in and in new territories.

Richards, who had cashed in when Doughty Hanson purchased Vue from management and other investors in 2010, will retain a significant part of his £50m stake in the firm alongside other executives, with the remainder split evenly between Omers and AIMCo. He said Vue was unlikely to open many more cinemas in the UK, but could use its new owners’ deep pockets to upgrade the company’s ageing portfolio. Vue’s Westfield cinemas in Shepherd’s Bush and Stratford are two of the UK’s three most lucrative establishments.

Omers’ European head Mark Redman, who enjoys a close relationship with Richards dating back to 2010 when it lost out to Doughty Hanson, said Vue was an attractive opportunity due to the industry’s resilience despite squeezed household budgets. He added that Omers and AIMCo would not target a quick exit, but could look to sell Vue within three to six years.

ADVISERS VUE’S BLOCKBUSTER SALE

ANTHONY GUTMAN

GOLDMAN SACHS

THE CANADIAN private equity giants behind the £935m takeover of Vue teamed up to employ Goldman Sachs’ Anthony Gutman, the co-head of Goldman’s UK investment banking division, to lead the corporate finance side of the takeover. Gutman, 38, is one of the rising stars of the M&A market, having been promoted to his role alongside fellow high-flyer Mark Sorrell in 2011 after just four years at Goldman. Gutman has been a long-time adviser to online gambling exchange Betfair, having worked on the company’s 2010 flotation and more recently working with the firm as it rejected private equity firm CVC’s £985m takeover offer. Gutman also worked on credit checking firm Experian’s takeover of Brazilian data provider Serasa and Sports Direct founder Mike Ashley’s recent £100m share sale. The former Citigroup banker had qualified as a lawyer with Freshfields after studying modern history at Oxford.

Allen & Overy partner Gordon Milne was the firm’s legal adviser, while Ernst & Young’s Ian Scott worked on financial due diligence and PwC’s Nick George handled commercial due diligence. Morgan Stanley advised on corporate finance for Doughty Hanson with Skadden Arps Slate Meagher & Flom as legal advisers.