Acquisition

14 Jun 2007 07:02

Entertainment One Ltd14 June 2007 14 June 2007 Entertainment One Ltd. Acquisition of Contender Entertainment Group and Placing Entertainment One Ltd. (the "Company"), a leading distributor of homeentertainment products in North America, today announces that it hasconditionally agreed to acquire Contender Limited and its subsidiaries (the "Contender Entertainment Group") for a total consideration of £49.4 million,payable by the issue of approximately 7.4 million ordinary shares inEntertainment One Ltd (the "Consideration Shares") and £42.0 million in cash. Contender Entertainment Group is a rights ownership and exploitation businessand is the leading independent distributor of content on DVD in the UK. Its corebusiness is the acquisition and exploitation of DVD distribution rights fromthird party producers. Through its division Contender Films, the businessacquires rights to distribute feature films in cinemas. Through its Licensingand Distribution divisions Contender also exploits in the UK and internationallyits children's content developed and produced by the in-house creative team ofRubber Duck Entertainment. Highlights • Contender is the leading independent distributor of filmed entertainment content on DVD in the UK • Published titles include Life on Mars, Spooks, Will & Grace, Cutting It; and Saturday Night Live • Contender also controls a library of over 170 feature film titles including The Grudge and Ong Bak • Contender's Rubber Duck Entertainment label exploits children's content developed in house. Its main titles are Tractor Tom(R) and Peppa Pig(R), which is currently broadcast on Nickelodeon Junior and Channel Five. International sales territories include Scandinavia, France and Germany. • Compound annual sales growth of over 20% since 2003 and normalised EBITDA margin of 25% in 2007 • In the year to 31 March 2007, Contender generated unaudited revenue of £25.1 million and normalised EBITDA of £6.3 million • Current management team led by Richard Bridgwood will remain in place • Deal expected to enhance EPS in year one Entertainment One's strategy is to build a leading international entertainmentcontent ownership and distribution business. The board of directors of theCompany believe that: • The UK is a key market for the successful development of this strategy • Contender represents a unique opportunity to establish a strong initial presence in the UK market • There are further opportunities for consolidation within the UK market from an established base • There are opportunities to exploit certain Contender content through North American infrastructure • There will be significant opportunities to leverage the Group position as a distributor in 3 major territories in rights acquisition and distribution (Canada, USA and UK) Darren Throop, CEO of the Company, said: "The acquisition of Contender is ourfirst major acquisition in Europe. It adds to our existing US and Canadianoperations and is a significant step in delivering our strategy of building aleading independent international entertainment content owner and distributor. Iam pleased to welcome Richard Bridgwood and his team into the group and amexcited about the opportunity to work with them going forward to execute on ourstrategy." Richard Bridgwood, Managing Director of Contender, said: "This deal enablesContender to continue its strong growth as part of a larger multi-territorygroup while retaining the existing highly successful management and staff inplace. It will enable us to enhance still further our service levels to ourcustomers and is a logical next step in the company's evolution. We aredelighted to be a core part of the exciting future that Entertainment Onepromises." Entertainment One Ltd also announces today that it has raised £21.65 million ofequity by way of a placing of approximately 20.2 million new Ordinary Shares,the net proceeds of which will be used to help fund the acquisition. Additionaldebt facilities are being provided by Barclays Bank plc. Completion of theacquisition and admission to trading of the Placing Shares, the ConsiderationShares and the EBT shares referred to below, which all rank pari passu in allrespects with the existing ordinary shares, is expected to take place on 4 July2007. The total number of ordinary shares in issue following the issue of thePlacing Shares, the Consideration Shares and the EBT shares will beapproximately 115 million. If the acquisition does not complete as a result of the failure of the Companyto satisfy conditions that are within its control, a £1 million break fee willbecome payable by the Company to Contender Limited. Share awards under the Company's employee incentive schemes representingapproximately 4.2 million ordinary shares will be made on or shortly aftercompletion of the acquisition. Awards representing approximately 0.5 millionshares will be made to Darren Throop. The share awards will be subject tosimilar performance criteria as the existing awards made under the Company'semployee incentive schemes. As part of the awards, approximately 3.2 millionordinary shares will be issued to the trustee of the Company's UK executiveshare plan (the "EBT shares"). Enquiries Finsbury +44 (0)20 7251 3801Faeth Birch/Don Hunter Entertainment One Ltd. +44 (0)20 7004 2700Giles Willits (Group CFO) Collins Stewart +44 (0)20 7523 8317Simon Atkinson About Entertainment One Ltd (LSE: ETO) History Admitted to trading on the AIM market of the London Stock Exchange on the 29thMarch 2007, Entertainment One Ltd's strategy is to build a leading internationalindependent entertainment content ownership and distribution business. The Business The current business comprises: • Entertainment One Ltd, is the largest wholesaler in Canada of DVDs, CDs and video games. The business has established relationships with the industry's largest producers developed over 25 years and it currently serves over 3,000 customers;. • Koch Entertainment is the largest independent record label in the US and a leading distributor of home entertainment products to the US market, with a market share of approximately 2.7%. As well as distributing the content produced and licensed by Koch Records, it also distributes the products of more than 120 independent music and video labels on an exclusive basis in both physical and digital formats. This information is provided by RNS The company news service from the London Stock Exchange