Acquirer Spring 2013 - Livingstone Partners

HOW THE ART-HOUSEJOINED THE MAINSTREAMThe sale of art-house cinema chain City Screen to the giant Cineworldshows the importance of an acquirer being sensitive to its target’s cultureAn art-house cinema operator and anationwide multiplex chain seem unlikelybedfellows. However, the December2012 sale of City Screen (which trades asPicturehouse) to Cineworld Plc for £47.3 millionis proving to be a very comfortable alliance.City Screen is the UK’s leading art-housecinema operator, and it targets a differentcustomer set to Cineworld’s youthful, blockbusterlovingcrowds. Its core audience is older, morediscerning and more interested in art-house andforeign language programming. The chain wasfounded in 1989 and, with backing from investorsArts Alliance and Albion Ventures, its foundersbuilt up a highly successful portfolio of sitesincluding the Cambridge Picturehouse, theGreenwich Picturehouse and The Ritzy inBrixton. Its newest opening, which coincidedwith the announcement of the acquisition, is TheDuke’s at the Komedia cabaret venue in Brighton.For Cineworld, which employs 4,000 peopleand runs 80 cinemas across the UK, theacquisition of City Screen enhances its positionin the valuable and high-growth premiumsegment of the cinema market, while addinga complementary portfolio of sites to itsexisting footprint.While Cineworld is the UK’s leader in big cityand out-of-town multiplex sites, Picturehouse hasperfected its ‘miniplex’ offering – small, high-endand architecturally interesting sites in ‘Londonvillages’ and university towns. Most importantlyfor City Screen’s management, the deal gives theart-house group the financial clout to extend itsportfolio of sites while preserving its unique andmuch-loved character.STRATEGY AND INTEGRITYWhile the strategic rationale for a deal was clear,getting the cultural fit right was always going tobe a key challenge. Christopher Jones, Directorat Livingstone London, who led the deal, hadworked with City Screen’s founders, Lyn Golebyand Tony Jones, for a number of years. He andSimon Cope-Thompson, Partner at LivingstoneLondon, knew it was essential for City Screen’sfounders that any potential purchaser had tocommit to respecting and preserving the integrityof the Picturehouse brand.“We have worked with Lyn and herLUCKY 7 – ANOTHER LEISURE DEALNick Harding, CEO of Marwyn Gaming andparent company Marwyn Management PartnersPlc, sought the advice and support of Livingstonein the sale of Marwyn Gaming to Merkur CasinoUK for £76 million in late 2012. This was theseventh deal Harding has worked on withLivingstone and demonstrates, he says, the firm’sability to think creatively to find solutions.“Having worked on deals with Livingstonesince 1996, we have built up a close workingrelationship. The team work harder thanany other M&A adviser I know. Simon Cope-Thompson is diligent, patient and understandsthe deal from an operator’s perspective. Havinghim onside is like having your own wingman.”Harding founded Marwyn Gaming (previouslyknown as Praesepe) in 2007. He has extensiveexperience in the sector and was previously CEOof Talarius, the UK market leader in adult gamingcentres, which was sold to Australian gamblinggroup Tattersall’s and Macquarie Bank in 2007.He took Praesepe from a standing start toa total of 173 operating sites in just five years.Acquired by Marwyn Management Partnersin 2011, Marwyn Gaming comprises 159 adultgaming centres, nine bingo clubs, five familyentertainment centres and an internet business,management team since 2008, when City Screenappointed Livingstone as a strategic adviser,”explains Christopher Jones. “Over the pastfour years, we have provided strategic guidanceand assisted the Company with its financingstructure. The relationship is based on trust andunderstanding, rather than a singleBeacon Bingo Online.The sale of Marwyn Gaming to Merkur wasoff-market and, given the direct relationshipbetween the principals, much of Livingstone’srole was carried out behind the scenes. AsCope-Thompson explains: “We were very heavilyinvolved in the strategy of the deal. We hadadvised on Marwyn Gaming’s acquisition of theLondon-based Agora gaming business in late 2011and, given our previous dealings with Nick andMarwyn, this meant that we could jump right intothe deal with great insight. It enabled us to guidethe management team through the entire process.”Merkur Casino is part of the GauselmannGroup, based in Westphalia in Germany. Hardingsays the Gauselmann story (Paul Gauselmannlaunched his business in 1957 and grew it to aninternationally acclaimed €1.7 billion enterprise)is one of the most inspiring in gaming.Following the deal, Harding will serve asCEO of Merkur Casino UK. He adds: “Thefinancial confidence the acquisition has givenMarwyn Gaming will allow us to implementthe progressive initiatives, which, I believe, willtransform the sectors we operate in. Gauselmannwill provide us with the financial backing and thesecurity to take the business forward.”WWW.LIVINGSTONEPARTNERS.COM // SPRING 2013 // 7