Terra Firma double bill

The buyout group has beaten off competition from rivals to acquire two of the UK’s leading cinema chains Odeon and UCI for close to £600m.

In separate transactions, Terra Firma Capital Partners has acquired Odeon and United Cinemas International (UCI), the largest and third-largest cinema operators by revenue respectively in the UK.

The London-headquartered private equity firm, headed by Guy Hands, is reported to have paid around £400 million (€596 million; $720 million) for Odeon and €270 million (£180 million; $325 million) for the UK and Europe network of UCI. Financial details of the transactions were not disclosed.

The double acquisition gives Terra Firma an approximately 35 percent market share of the UK cinema market and around 14 percent of European box office takings.

Odeon operates 97 cinemas and 619 screens across the UK and produced an EBITDA of £38.5 million in 2003. UCI has 86 cinemas with 834 screens across Europe, operating in the UK, Ireland, Spain, Portugal, Italy, Germany and Austria (UCI's network in Asia and Brazil were not part of the deal). Completion of the UCI acquisition is conditional upon regulatory filings and certain country approvals.

Terra Firma beat off rival bids from US buyout firm Blackstone and private investor Robert Tchenguiz to secure the Odeon chain, which had also attracted earlier interest from Vue Entertainment, the cinema group controlled by BC Partners and Legal & General Ventures.

The UCI auction on behalf of owners Vivendi Universal and Paramount Pictures had also attracted interest from HgCapital, Providence Equity Partners and CineUK which had partnered with former chairman of Carlton Communications Michael Green for the bid.

The sale of Odeon comes just 18 months after its acquisition by its current shareholders from UK-based buyout house Cinven in a £430 million deal in March 2003. Cinven doubled its money in the three years it held the cinema chain before selling to a consortium of investors including WestLB's principal finance group (then led by Robin Saunders), Robert Tchenguiz, Entertainment Group and property entrepreneur Guy Dellal.

These transactions are Terra Firma's third and fourth deals since launching in 2002, following the £227.5 million (€340.8 million; $412.1 million) acquisition of the British waste management business of Shanks, the European waste management company in May this year.

Terra Firma’s first deal was the £530 million acquisition of landfill operator Waste Recycling Group in July 2003. The firm closed its debut €2 billion buyout fund in March this year.