French firms pursue cinema assets

LBO France and CDC Ixis Equity Capital have both confirmed their interest in UGC, the European cinema chain valued by parent Vivendi Universal at E550m.

The sale of UGC, Europe’s largest cinema chain which is 58 per cent owned by Vivendi Universal, looks set to be a two-horse race between two French private equity firms after LBO France and CDC Ixis Equity Capital both confirmed their interest in the business.

 

UGC, which operates 92 cinema complexes across Europe with a total of 878 screens, had 60m customers in 2002. Vivendi is trying to sell its stake for up to E500m as it continues to make disposals aimed at lowering its multi-billion euro debt. Before any sale can be completed, the French media group will have to reach agreement with the Verrecchia family, which holds 20 per cent of UGC and has first option on Vivendi’s stake.

 

In March, PAI, CDC Ixis Equity Capital, Morgan Stanley Private Equity and LBO France were tipped as likely bidders, with Apax Partners, Eurazeo, Legal & General Ventures and Permira also considering offers for the business. PAI Management was given access to UGC’s books, but decided against making a firm offer.

 

A deal for UCG would extend private equity interest in the cinema sector in 2003, which began with German investment bank WestLB acquiring UK chain Odeon from private equity house Cinven in a £430m transaction in March. Legal & General Ventures is also thought to be mulling a £250m offer for the Warner Village cinema chain, a joint venture between Warner Brothers and Village Roadshow, the Australian cinema group.

 

Vivendi is being advised on the sale of UCG by Clinvest, a unit of Credit Lyonnais.