VUE INTERNATIONAL is considering an audacious £600m bid for rival cinema operator Odeon.
Sources close to Vue said it would consider making an offer for Odeon, the chain owned by buyout supremo Guy Hands’ Terra Firma, when it is put up for sale in the next few months.
Hands, best known for his troubled ownership of the EMI music company, said earlier this year that he wanted to sell Odeon for £1bn. It is believed dealmakers could start hunting for a buyer as soon as October. When that happens, Vue is likely to be at the front of the queue, sources said.
Vue said last night that no talks had taken place. “We are not considering it today,” a spokesman said. Terra Firma has yet to appoint advisers to run the sale.
A deal between two of Britain’s three biggest cinema operators, which would see them run 452 sites in total, would attract the scrutiny of the Competition & Markets Authority, but industry experts believe an agreement could be reached if Vue made a commitment to sell cinemas in certain areas.
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The company has expressed interest in Odeon before. In 2013, its chief executive Tim Richards said he would be “very interested” in making a bid, although no formal discussions took place.
Terra Firma bought Odeon for €650m in 2004 and merged it with rival UCI, which it purchased in the same year for €350m. Hands has tried to sell the chain on several occasions, without success.
Now would be a good time to do a deal. A string of blockbuster films is due over the next year, including the latest in the James Bond and Star Wars franchises. The final instalment of the Hunger Games, starring Jennifer Lawrence, will hit cinemas in November.
Bankers said Hands is unlikely to get his desired price for Odeon, however. A poor year for new releases in 2014 saw the chain’s underlying profits fall sharply to £53m, making £1bn difficult to justify. It also makes a float an unlikely option for Hands.
There have been signs of improvement this year. Vue, Odeon and Cineworld, Britain’s only listed operator, have bounced back thanks to the success of films such as Jurassic World and Mad Max: Fury Road. Sources close to Vue said any offer for Odeon was likely to be close to £600m.
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Vue is not short of cash. It is backed by Ontario Municipal Employees’ Retirement System and Alberta Investment Management. The Canadian funds bought the chain for £935m in 2013 and since then it has been on a buying spree.
Last week Vue bought a Dutch rival for €85m (£61.7m), in a deal that will make it Europe’s No 2 operator by number of sites.