Odeon cinemas put up for sale
The owner of Odeon cinemas has placed an asking price of £1 billion on its head.
The future of Odeon and UCI cinemas is set to change after the chain's owner announced plans to put it up for sale.
Private equity group Terra Firma is seeking around £1 billion for the franchise and wants to start the sales process by May. It has also suggested that it may float the cinema chain on the London Stock Exchange instead of putting it up for sale. It comes at a time when Odeon has experienced a significant downturn in operations.
In April 2014, the chain announced that profits before interest, tax and other charges for 2013 had fallen by 24 per cent to £69.2 million. This was compounded by a five per cent drop in sales to £706.7 million. It is the second time that Terra Firma has tried to sell Odeon/UCI since purchasing the chain in 2004.
At that time it paid €650 million (£475 million) for Odeon and €350 million for UCI and merged the two companies. In 2011, it attempted to sell the newly-formed franchise but withdrew after bids failed to come close to its £1.2 billion valuation.
Terra Firma believes that overseas investors will be key to selling the cinema chain.
Guy Hands, chairman of Terra Firma, said: "We are likely to appoint banks by May. Possible buyers could include US cinema groups or South American cinema firms, and private equity groups from Europe, the US, and China."
Cineworld increases competition
Odeon's struggles have been combined with the expansion of rival Cineworld. The UK's largest cinema operator announced a deal in January that will see it take over around 100 multiplexes in eastern Europe and Israel. The cash and shares deal, valued at about £500 million, has been described as "an exciting and unique opportunity" for the company.
Cineworld will take over premises previously owned by Cinema City International which has cinemas in the likes of Poland, Bulgaria, Hungary and Israel among others.