Doughty Hanson & Co., a private equity firm, agreed to buy the U.K.’s third-largest cinema operator, Vue Entertainment Ltd., from existing managers and an affiliated investment fund, Och-Ziff Capital Management Group.
Vue’s management team, including founder and Chief Executive Officer Tim Richards, will “be reinvesting in the transaction,” Doughty Hanson said in a statement today. Doughty Hanson beat out BC Partners Ltd. and the Ontario Municipal Employees Retirement System after agreeing to pay 450 million pounds ($730 million), a person with direct knowledge of the deal said.
“The company has achieved consistent financial performance and has succeeded in growing through the recent recession,” Julian Huxtable, senior principal a Doughty Hanson, said in the statement.
Vue Entertainment, which operates 700 cinema screens, may use the money raised in the sale to buy a competitor such as Odeon & UCI Cinemas Group, the U.K.’s largest chain, or Cineworld Plc, several people familiar with the matter said previously. Vue may also consider buying an operator in Europe, the people said.
Leveraged buyouts are rebounding after the supply of loans they use to finance their acquisitions evaporated in the credit crisis, almost bringing dealmaking to a halt. The firms have led $138 billion of transactions in 2010, more than twice the amount in the year-earlier period, data compiled by Bloomberg show.
The cinema chain, based in London, is 52 percent-owned by its executives, while hedge fund manager Och-Ziff Capital Management Group LLC has a 19 percent stake and Coller Capital Ltd. holds 29 percent.
Private equity firms pool money from investors to take over companies, financing the purchases mostly with debt, with the intention of selling them later for a profit.