Vue Entertainment set for expansion after £935m sale

Tim Richards said top-quality films were key to the success of the cinema industry. Picture: AP
Tim Richards said top-quality films were key to the success of the cinema industry. Picture: AP
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ONE of Britain’s biggest cinema chains, Vue Entertainment, has been sold to a Canadian consortium for £935 million in a deal that could ultimately see it become a film producer and distributor.

Omers Private Equity and Alberta Investment Management will pay more than twice the £450m that seller Doughty Hanson paid for Vue less than three years ago, and are expected to continue its recent expansion spree across Europe.

Vue’s management team, led by founder and chief executive Tim Richards, will reinvest following the deal to retain a substantial stake and continue to run the business. Employees owned about 27 per cent of the company when it last filed accounts in November.

Richards told The Scotsman that part of the strategy behind the change of ownership was to allow Vue to continue growing. He is already eyeing more acquisition targets and has longer term plans to start making films as well as becoming a distributor of smaller British movies.

He said top-quality films were key to the success of the cinema industry, as demonstrated by the huge boost to box office takings provided by the latest James Bond blockbuster, Skyfall.

Moving into production was “absolutely part of the future, but long term”, he said.

He added: “In three to five years we would like to do distribution, cut out the middle man for smaller films and get more British films on the screen at a lower cost.”

Headquartered in West London, Vue started life in 1998 as SBC International Cinemas and was rebranded in 2003 following the acquisition of Warner Village Cinemas.

Richards hailed the successful partnership with Doughty Hanson, which saw the group grow from 70 cinemas at the time of its takeover in December 2010 to 146 across Europe today. The number of screens has risen from 678 to 1,321, with the latest addition, Polish number two operator Multikino, added just last month for €100m (£85m).

Last year it bought Apollo Cinemas in May and Germany’s second-largest operator, CinemaxX, in July. The company has also rolled out digital technology across the estate and opened new cinemas such as the 17 screen Vue Stratford in London.

None of the parties in the transaction has said how the investments, totalling around £250m for the acquisitions alone, have been accounted for in the deal.

Doughty Hanson calculates it made a return of about 32 per cent overall on its investment in Vue.

Toronto-based Omers was one of the suitors outbid by Doughty, one of the largest private investment firms in Europe.

Julian Huxtable, a partner at Doughty Hanson, said Vue had been “a successful and exciting investment”, helping the company to develop into one of the world’s largest cinema operators

“We said at the time of the acquisition that Vue offered a strong platform for growth and we are pleased to have been able to take advantage of this opportunity to return significant cash to our investors,” he said.

Vue’s gross box office revenues in the UK and Ireland rose 3.2 per cent last year to almost £1.2 billion. The company claims to have a 21.5 per cent share of the cinema market in the British Isles.