Blackstone, Terra Firma in final Odeon preview

The final round of bidding for the £380m UK cinema chain has narrowed the field down to the two private equity firms and one property investor.

US buyout firm Blackstone and London-headquartered Terra Firma Capital Partners led by Guy Hands, are two of the final three bidders for UK cinema chain Odeon, alongside property investor Robert Tchenguiz.

The final round of bidding could see a winning bid of approximately £380 million (€564 million; $683 million), according to a source close to the transaction.

Odeon is the UK’s largest cinema operator, with 600 screens across 97 sites, including prime central London locations in Kensington and Leicester Square.

The auction was sparked, according to a report from Reuters, when Tchenguiz, who currently holds a 17.5 percent stake in Odeon, failed to win the support of other shareholders for his £360 million pre-emptive bid last month. German bank WestLB is the largest shareholder in Odeon, holding a 43 percent stake.

Cinema chains have become increasingly attractive to private equity houses on both sides of the Atlantic in recent months. In July JP Morgan Partners and Apollo Advisers agreed to buy publicly traded movie chain AMC Entertainment for $2 billion.

In June, Boston-based Bain Capital paid $1.46 billion for Loews Cineplex and in March this year Cinemark was sold to Chicago-headquartered Madison Dearborn for $1.6 billion.

In the 1990s, a number of US buyout houses had disastrous experiences with movie chain experiences. Most famously, Kohlberg Kravis Roberts and Hicks, Muse, Tate & Furst each lost $500 million in Regal Cinemas.

In the UK, Blackstone and Guy Hands are also reported to be bidding for the UCI cinema chain, a rival to Odeon, with the possibility of merging the two chains if successful.

An announcement on the outcome of the Odeon auction is expected in the near future.