Terra Firma exits Odeon and UCI to AMC in £921m deal

Kenny Wastell
12 July 2016

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Terra Firma has agreed to sell Odeon & UCI Cinemas Group to listed US trade buyer AMC Theatres, in a deal valuing the business at ТЃ921m.

AMC will pay £500m for the company's equity, 75% of which will be paid in cash and 25% via stock in the combined group.

The acquirer stated the "three-decade low" of sterling versus the dollar made the valuation "highly favourable", despite "some uncertainties related to Brexit".

The sale comes three years after Terra Firma reportedly shelved plans to sell the cinema chain following a strategic review by JP Morgan and Goldman Sachs. At the time, the company's poor performance in the Spanish market had reduced the overall group value, with the corporate finance houses subsequently advising the GP not to postpone the sale.

AMC is also in the process of bidding for another listed US cinema chain, Carmike Cinemas, a deal that will not be impacted by its acquisition of Odeon & UCI.

Odeon & UCI had debt of £407m in March, which will be refinanced on completion of the deal. Citi provided a debt package to support AMC's acquisition. The overall funding plan comprises term loans and bonds with leverage of approximately 4x adjusted EBITDA.

Previous funding
Terra Firma acquired Odeon in August 2004 for €650m. The private equity firm then merged Odeon with UCI, which it acquired for €350m that same year. Barclays arranged debt facilities in the transactions.

Company
Founded in 1930 and headquartered in London, Odeon & UCI is a cinema group comprising 242 theatres across Europe. It operates under the Odeon brand in the UK & Ireland; UCI in Germany, Italy, Austria and Portugal; and Cinesa in Spain. In the year to March 2016, the business generated a turnover of $1.16bn.

The newly merged group will comprise 627 locations across eight countries.

People
Terra Firma – Guy Hands (chairperson, chief investment officer).
AMC Theatres – Adam Aron (CEO, president).
Odeon & UCI Cinemas Group – Paul Donovan (CEO).

Advisers
Vendor – Goldman Sachs International (corporate finance); Gibson Dunn & Crutcher (legal).
Acquirer – Citi (corporate finance); Pinsent Masons (legal); Husch Blackwell (legal); Weil Gotshal & Manges (legal).