Cineworld Group Plc Announces Acquisition Picturehouse

Posted: 6th December 2012 10:14

Cineworld Group plc ("Cineworld" or the "Group") today announces that it has acquired City Screen Group, which trades as Picturehouse ("Picturehouse"), for £47.3 million in cash. Picturehouse is the UK's leading independent cinema operator with 21 sites (60 screens), including The Duke's at Komedia in Brighton which opens today. As part of the transaction, Cineworld has also acquired Picturehouse Entertainment, the distribution arm of Picturehouse.

Transaction highlights
  • Strengthens Cineworld's position in a high value, high growth segment of the UK cinema market
  • Adds a complementary portfolio to Cineworld's existing footprint, from both a geographic and strategic perspective
  • This acquisition will enable Picturehouse to unlock more than 10 new locations already in the pipeline
  • Picturehouse will operate as a separate business entity within the Cineworld Group and will continue to be run by the existing Picturehouse management team
  • Builds Cineworld's food and beverage retail capabilities
  • High single digit enhancement to earnings per share expected in 2013
Commenting on the acquisition, Stephen Wiener, Chief Executive Officer of Cineworld, said:
"We are delighted to welcome Picturehouse to the Cineworld Group. This acquisition gives us an opportunity to accelerate our growth by reaching new audiences in a high value and growing part of the market. We recognise that Picturehouse is valued by its customers and we look forward to supporting the business through the next phase of its development."

Picturehouse is led by founder director Lyn Goleby, who is supported by a highly experienced team. Lyn Goleby and her team will continue to lead the development of the Picturehouse business under Cineworld's ownership. Lyn Goleby will continue in her role as Managing Director of Picturehouse.

Lyn Goleby said:

"The opportunity to be part of a public company is great news for Picturehouse and our customers. We are known for our high quality city centre cinemas and our distinctive, wide-ranging programming. The unique character of Picturehouse cinemas will remain and our team will continue to bring the widest range of film to customers. This acquisition by Cineworld will accelerate the development of further Picturehouse cinemas around the country."

Information on Picturehouse

For the year ended 31 December 2011, Picturehouse reported audited sales of £30.3 million, profit before tax of £2.5 million and gross assets of £35.0 million. Picturehouse reported audited sales of £26.5 million and £25.3 million in the years ended 31 December 2010 and 31 December 2009, respectively.

For the year ending 31 December 2012, Picturehouse is expected to generate EBITDA of approximately £5.0 million. In addition, Cineworld expects to be able to generate at least an additional £1.0 million per annum through integration benefits and the full year effect of new sites opened in 2012. As part of the transaction, Cineworld will acquire Picturehouse's freehold property assets, which were valued at £9.0 million (as at 31 December 2011).

Prior to today's announced transaction, Picturehouse's primary shareholders were Arts Alliance, Lyn Goleby and Albion Venture Capital Trust.

Transaction financing

The acquisition values Picturehouse at £47.3 million on a cash and debt free basis. Consideration for the acquisition is in cash, which is being funded from existing undrawn bank debt facilities, assumed debt and the cash proceeds from a proposed issue of up to 6.85 million new ordinary shares, representing approximately 4.8% of Cineworld's current issued ordinary share capital, mostly via a placing to institutional and certain other investors of up to 6.40 million new ordinary shares of one pence in the Company (representing approximately 4.5% of Cineworld's current issued share capital) (the "Placing"), also announced today.

Stephen Wiener, CEO of Cineworld, Philip Bowcock, CFO of Cineworld, and Non Executive Directors Martina King, David Maloney, Eric Senat and Peter Williams intend to subscribe for, in aggregate, approximately £250,000 of new ordinary shares in Cineworld in connection with the Placing. Separately, as part of the acquisition arrangements, Lyn Goleby has agreed with Cineworld to reinvest a portion of her sale proceeds by subscribing for £1.0 million of new ordinary shares in Cineworld at the price per ordinary share at which shares are placed with placees in the Placing.

Related articles