Agora has signed a preliminary agreement to acquire 84% of shares of the company Centrum Filmowe Helios S.A.
30-03-2010
Press release
On March 30, 2010 Agora has signed a preliminary agreement to acquire 84% of shares of Centrum Filmowe Helios S.A. from Nova Polonia Private Equity Fund, LLC and Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V., whose advisor is Krokus PE. The total purchase price amounts to ca. EUR 25 million but may be increased by the amount not higher than EUR 1 million. Helios, directly and indirectly, through its subsidiary Kinoplex Sp. z o.o., operates the network of multi-screen movie theatres (multiplexes) in Poland and has ca. 22% share of the multiplex cinema market in Poland (*).
The acquisition of shares of Helios would be in line with the long term strategy of the Agora Group, which entails diversification of its stream of revenues and widening the scope of its activities in the growing sectors of a broadly-defined media market. In addition, it will strengthen the Group's position in the entertainment segment and reduce the dependence of the Group's results on the condition of the advertising market. - said Piotr Niemczycki, CEO of Agora SA.
Helios started its operations in 1993. Over the last 17 years the company has developed its operations by both organic growth and successful acquisitions (including acquisition of the network of 5 multiplex cinemas under Kinoplex brand in 2007) and created the largest cinema network in Poland in terms of the number of cities covered. The network consists of 26 cinemas: 24 multiplexes and 2 traditional cinemas, with the total of 140 screens and over 31 thousand seats. Helios concentrates its operations in cities below 250 thousand inhabitants and is a market leader in that segment. Cinemas of Helios and Kinoplex are also located in the largest Polish cities, inter alia in Warsaw, Lodz, Gdansk, Wroclaw.
The company generates the majority of its revenues from sales of tickets as well as food and beverages (74% and 21% of the total revenue in 2009, respectively). The market share of the Helios Group (Helios and Kinoplex) in respect of total number of tickets sold in multiplexes in Poland in 2009 stood at ca. 24%.
The cinema market in Poland in 2009 proved to be resistant to the negative impact of the economic slowdown and registered growth of both the number of tickets sold (up by 16% to 39 million tickets) and revenues from ticket sales (up by 25% to PLN 681 million) in comparison to 2008.
It'll be a good investment in a buoyant company run by the dynamic and very competent management team. We'll enter the cinema market, which appears to have a significant growth potential. In comparison to European Union countries, the number of tickets sold per capita and the market saturation measured by the number of cinema screens per 1 million inhabitants are relatively low in Poland. The development of this market in future will depend on the growth rate of GDP and real salaries as well as the number of new shopping centers which will be built in Poland. The factors that may act as catalysts for this growth are related to the progressing change in the lifestyle of consumers, development of the Polish film industry and the new digital technology (3D). - said Zbigniew Bak, Deputy President of the Management Board of Agora, supervising, inter alia, the New Business Division of the company.
The total price to be paid for 84% of shares of Helios shall amount to EUR 25.000.609,76. The purchase price may be increased by the amount not higher than EUR 1.063.100, depending on the results of the review of the liabilities of Helios to be carried out by an external expert.
The shareholders of Helios shall have the pre-emptive right to purchase the shares which are to be acquired by Agora and the right to demand that Agora buy their shares simultaneously with acquiring 84% of shares of Helios from the main shareholders (tag along right).
The preliminary purchase agreement stipulates that the execution of the final sales contract, providing for the acquisition of the shares of Helios by Agora, is dependent on the fulfillment of certain conditions precedent typical for this type of transactions, including obtaining the consent for the transaction from the President of the Competition and Consumer Protection Office. Agora may also withdraw from the preliminary agreement if certain obligations imposed on the other parties are not fulfilled, certain representations and warranties are breached or if certain, significant events occur, including occurrence of the material adverse change as defined in the preliminary agreement.
(*)The share in the multiplex market defined as the sum of seats available in multiplexes belonging to 3 main cinema operators (Cinema City, Multikino, Helios with Kinoplex)
Sources:
the number of tickets sold, revenues from sales of movie tickets in Poland, data regarding multiplex market: Helios on the basis of Boxoffice.pl.
