Barclays PE buys The Mill for £119m from Carlyle

Emanuel Eftimiu
20 April 2011

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In a tertiary buyout Barclays Private Equity (BPE) has acquired advertising visual effects group The Mill for ТЃ119m from The Carlyle Group.

Investment bank Harris Williams & Co ran a structured sales process that attracted both international strategic and private equity buyers alike.
BPE was attracted to the deal as it regards The Mill to be well positioned to benefit from the changes in the advertising market and rapidly growing demand of brands to interact with their customers via moving image content.

The new investor will look to continue to grow the company organically, and develop opportunities in adjacent markets such as digital advertising and creating cinematic sequences for video games. BPE also plans to further expand the business into emerging economies in Asia and South America.

Debt
Lloyds Bank Corporate Markets Acquisition Finance, Bank of Ireland and GE Capital supported the transaction with a debt package.

Previous funding
The Carlyle Group acquired The Mill in a secondary buyout from 3i in February 2007. Although the deal value was not disclosed at the time, media reports suggested it to be in the region of £50m. Carlyle made the investment through its Carlyle Europe Technology Partners fund while Royal Bank of Scotland provided a senior debt package to support the deal. 3i had mandated LongAcre Partners to facilitate the disposal. Carlyle's bid was strengthened by its presence in the US, where The Mill was seeking further expansion.

Under Carlyle's ownership The Mill grew organically and developed its offering in the advertising digital visual effects segment. The company opened a new office in Los Angeles and expanded its geographical reach with a focus on Asia.

3i originally acquired The Mill for £28m in 2001 from Shepperton Studios, a Candover portfolio company, which at the time of 3i's buyout was simultaneously acquired by Pinewood Studios, representing an exit for Candover.

Company
The Mill was founded in 1990 and provides digital visual effects for advertisements made for television, the internet, outdoor advertising screens and mobile devices. The company has offices in London, New York and Los Angeles and boasts a client list that includes advertising holding companies such as Omnicom, WPP, Publicis Group and Interpublic as well as agencies such as AMV BBDO, Ogilvy, BBH and McCann. It further works for broadcasters and television production companies such as the BBC, Shine and Impossible and for games developers and publishers including Sony Computer Entertainment and EA. In 2010 the Mill generated revenues of £74.2m emplying 625 staff.

People
Steven Silvester handled the transaction for Barclays Private Equity. Robert Easton led the exit for Carlyle.

Advisers
Equity - KPMG (Financial due diligence); Value Partners (Commercial due diligence); Marlborough Partners (Corporate finance); Clifford Chance (Legal); Deloitte (Tax); Heath Lambert (Insurance due diligence)
Debt - Hogan Lovells (Legal)
Management - Jamieson Corporate Finance (Corporate Finance); Dickson Minto (Legal); Deloitte (Tax)
Vendor - Harris Williams & Co, Thierry Monjauze, Red Norrie, Francois Morin, Eric Logue (Corporate Finance); Travers Smith (Legal); PricewaterhouseCoopers (Vendor due diligence)