Terra Firma eyes Odeon exit

The European firm has hired advisors to sell Europe’s largest cinema chain, in a transaction likely to value the business at more than £1bn.

Terra Firma Capital Partners is preparing to sell Odeon & UCI, the European cinema chain it acquired nine years ago. 

The Guy Hands-led firm last week appointed JPMorgan and Goldman Sachs to find potential buyers, according to a source close to the matter. Whilst other options were being considered, including refinancing or dividend recapitalisation, the most likely outcome would be an IPO or straightforward sale, the source said. 

The news was first reported in the Financial Times.

This is not the first time Terra Firma has attempted to dispose of the business. The group initially prepared for a sale in 2010, but the process was later abandoned after Terra Firma successfully refinanced Odeon’s debt through a £475 million (€563 million, $730 million) bond issue in 2011. 

Terra Firma bought
Odeon in 2004

According to the Financial Times, potential bidders could include Dalia Wanda, a Chinese property group that bought US cinema chain AMC for $2.6 billion last year, as well as BC Partners, which had reportedly been looking at the business in 2011. It is understood that the transaction could value the company at more than £1 billion.

Terra Firma first invested in the cinema chain in 2004, when it bought Odeon for €650 million. It then combined it with UCI, acquired the same year for €350 million, to form the UK’s largest chain. The company is now the largest cinema group outside the US. It had 236 cinemas and 2,179 screens as of December 2012. 

The revived disposal plans come amid rising expectations that Terra Firma will attempt to raise a new €2 billion to €3 billion fund next year, two years after the debacle that saw it lose ownership of music label EMI to lender Citigroup. Firm founder Guy Hands previously told PEI the firm’s ability to raise a new fund depended entirely on its success with realisations and getting Fund III ‘back to flat’.  

Terra Firma Capital Partners Fund III closed on €5.38 billion in 2007.