Market Watch

Major UK Circuit Vue is Sold to Private Equity Firm


Display Driver IC Forecast


UK's third largest circuit, Vue Entertainment, has agreed to be acquired by private equity group Doughty Hanson for £450m ($630m). Vue's management team formerly held the majority stake, of which an undisclosed amount will be reinvested, while other major stakeholder HBOS sold on its assets to secondary buy-out house Collar Capital earlier this year. Collar Capital and Och-Ziff held stakes of 29 per cent and 20 per cent respectively. Vue Entertainment was established following the acquisition of former Warner Village Cinemas by relative minnow SBC Cinemas back in 2003. In 2007, its management team secured a buy-out (MBO) for a 51 per cent share in tandem with investment group led by HBOS. As part of their wider strategy, Vue's management have flagged potential for further synergies through major industry consolidation in the near future.

Analysis
Deal marks the first major change of ownership for a UK cinema chain since the aforementioned MBO of Vue Entertainment in 2007 and the flotation of rival cinema group Cineworld, also back in 2007. Deal comes at a significant time for the industry as major circuits are in the process of investing heavily in both digital and 3D formats. Uk's two largest circuits, Odeon and Cineworld, have already agreed full scale d-cinema deployment deals with DDA, a privately owned third-party firm, and Arts Alliance Media respectively. Vue Entertainment has agreed to install Sony 4K projectors throughout its circuit, aimed at giving it a competitive advantage over standard 2K DLP Cinema projectors which currently have the larger footprint in the UK and in Europe. Industry consolidation may result in further economies of scale in process of digital upgrade and distribution of film and alternative content. Nonetheless, the UK's cinema sector remains one of the most concentrated in Europe as the top five circuits currently control 70 per cent of total screens.
 
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