PARIS – Signaling its intent to concentrate on production, French mini-major Gaumont will sell its 34% stake in Les Cinemas Gaumont Pathé, one of Europe's biggest cinema theater chains, to fellow shareholder Pathé in a deal worth €380 million ($400 ...and more »
PARIS â€“ Signaling its intent to concentrate onÂ production, French mini-major Gaumont will sell its 34% stake in Les CinÃ©mas Gaumont PathÃ©, one of Europeâ€™s biggest cinema theater chains, to fellow shareholder PathÃ© in a deal worth â‚¬380 million ($400 million).
Gaumontâ€™s exit from Les Cinemas Gaumont PathÃ© ends a 16-year partnership with PathÃ© on the theater circuit. The chain is Franceâ€™s biggest, and also operates in the Netherlands, Switzerland and Belgium, comprising 108 theaters and 1,076 screens.
Gaumontâ€™s divestment will allow it â€œto accelerate the promising development of its TV production activities in the U.S. and Europe, to reinforce its theatrical film production and to plan the expansion of Gaumontâ€™s activities in Europe,â€ said Gaumont CEO Sidonie Dumas.
JÃ©rome Seydoux, PathÃ© president, added: â€œThis acquisition is a clear sign of PathÃ©â€™s will to develop and modernize cinema theaters.â€
â€œThe cinema theater is essential for theatrical films and theatrical films for cinema theaters,â€ Seydoux added.
The Gaumont-Pathe deal underscores the differences in strategic orientation between the two companies. One of the worldâ€™s oldest film production companies, which dominated global production in the first decade of last century,Â PathÃ© produces sometimes highly notable films,Â PathÃ© produces sometimes highly notable films,Â backing or co-producing as well as distributing and selling upscale mainstream international titles, such as Oscar winner â€œSlumdog Millionaire,â€ as well as art film and comedy co-productions in France, such as on Dany Boonâ€™s current smash hit â€œRaid, Special Unit,â€ which is the No. 1 release in France of any nationality this year, earning over $25 million and counting. Â That said,Â JÃ©rome Seydoux has insisted in the past that PathÃ©â€™s main profit center is not production â€“ though PathÃ© produces sometimes highly notable filmsÂ â€“ but exhibition and one of PathÃ©â€™s largest achievements under Seydoux has been the creation and modernization of one of Europeâ€™s largest theater chains.
Headed by Jerome Seydouxâ€™s brother, Nicolas Seydoux, Gaumont has driven hard into TV production, setting up Gaumont Television in not only Paris but Los Angeles and London and producing â€œNarcos,â€ one of the mainstays of Netflixâ€™s recent global subscriber base. Gaumont has now launched a U.S. film production division. It also aims to grow its European TV series production business.
PathÃ© already owns 66% of Les CinÃ©mas Gaumont PathÃ©. It will now become the sole owner. In immediate terms, Gaumont aims to use a maximum â‚¬125 million ($131.8 million) from the $400 million deal to offer to buy back minority shareholder stakes in the company. Gaumont is currently 65% owned by Nicolas Seydoux via his holding CinÃ©par.
Minority shareholders are U.S. investment group First Eagle IM (10%) and Franceâ€™s BollorÃ© Group (10%) and Marcel Dessault (5%).
The remaining 10% of Gaumont stock is held via a free float on the stock exchange. Overseen by Sorgem, a Paris-based brand equity research company, the share buy back, if put through in its entirety, would leave Nicolas Seydoux with 100% of Gaumont.
The $400 million disposal would also clear Gaumontâ€™s â‚¬205 million ($216.1 million) in company debt, leaving it in a net cash positive position of around â‚¬50 million ($52.7 million) with â€œall the required resources to implement its strategy, in particular the development of its production activities,â€ the company said in a statement on March 1. In the same statement, it announced full-year 2016 results of â‚¬188.7 million ($198.9 million) in revenue, down 13.0% on 2015,Â and a â‚¬23.2 million ($24.45 million) operating profit, up 8.4% on the year before.
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