Private equity firm Doughty Hanson has agreed to buy Vue Entertainment, Britain's third-biggest cinema chain, in a deal which a source said valued the business at about £450m sterling.
Doughty Hanson agreed to buy the business from Cavendish Square Partners, a joint venture between private equity group Coller Capital and Lloyds Banking Group, US hedge fund Och-Ziff and existing management.
In a joint statement, Doughty and Vue said management, including founder and CEO Tim Richards, who had owned 51% will reinvest in the company. The statement gave no financial details.
The deal valued the business at £450m including debt, a source familiar with the situation said.
Cinema's powers of cash-generation and resistance to recession, coupled with opportunities offered by 3D films and the transfer to digital projection, drew a range of bidders.
Earlier reports said Doughty beat rival offers from BC Partners and the private equity arm of Ontario Municipal Employees Retirement System (Omers), the Canadian pension fund.
The deal could lead to a major shake-up of Britain's cinema business. The industry is dominated by private equity, with top player Odeon owned by Guy Hands's Terra Firma, and number two operator Cineworld Group backed by Blackstone Group.
Richards is hoping the new investors will back him to take over one of the bigger players, the earlier reports said. Vue made earnings before interest, tax, depreciation and amortisation (EBITDA) of £51.5m in 2009.
