Acquisition of Contender Entertainment Group and Placing
14 June 2007
London, June 14, 2007: Entertainment One Ltd. (the 'Company'), a leading distributor of home entertainment products in North America, today announces that it has conditionally 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 in Entertainment One Ltd (the 'Consideration Shares') and £42.0 million in cash.
Contender Entertainment Group is a rights ownership and exploitation business and is the leading independent distributor of content on DVD in the UK. Its core business is the acquisition and exploitation of DVD distribution rights from third party producers. Through its division Contender Films, the business acquires rights to distribute feature films in cinemas. Through its Licensing and Distribution divisions Contender also exploits in the UK and internationally its children's content developed and produced by the in-house creative team of Rubber 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 normalized 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
- 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 our first major acquisition in Europe. It adds to our existing US and Canadian operations and is a significant step in delivering our strategy of building a leading independent international entertainment content owner and distributor. I am pleased to welcome Richard Bridgwood and his team into the group and am excited about the opportunity to work with them going forward to execute on our strategy.'
Richard Bridgwood, Managing Director of Contender, said: 'This deal enables Contender to continue its strong growth as part of a larger multi-territory group while retaining the existing highly successful management and staff in place. It will enable us to enhance still further our service levels to our customers and is a logical next step in the company's evolution. We are delighted to be a core part of the exciting future that Entertainment One promises.'
Entertainment One Ltd also announces today that it has raised £21.65 million of equity 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. Additional debt facilities are being provided by Barclays Bank plc. Completion of the acquisition and admission to trading of the Placing Shares, the Consideration Shares and the EBT shares referred to below, which all rank pari passu in all respects with the existing ordinary shares, is expected to take place on 4 July 2007. The total number of ordinary shares in issue following the issue of the Placing Shares, the Consideration Shares and the EBT shares will be approximately 115 million.
If the acquisition does not complete as a result of the failure of the Company to satisfy conditions that are within its control, a £1 million break fee will become payable by the Company to Contender Limited.
Share awards under the Company's employee incentive schemes representing approximately 4.2 million ordinary shares will be made on or shortly after completion of the acquisition. Awards representing approximately 0.5 million shares will be made to Darren Throop. The share awards will be subject to similar performance criteria as the existing awards made under the Company's employee incentive schemes. As part of the awards, approximately 3.2 million ordinary shares will be issued to the trustee of the Company's UK executive share plan (the 'EBT shares').For further information, please contact:
DDA Public Relations
Lawrence Atkinson
E:
lawrence.atkinson@ddapr.com
T: +44 (0) 20 7932 9800
Alice Gledhill Hall
E:
alice.gledhillhall@ddapr.com
T: +44 (0) 20 7932 9800
Note to the Editors:
Entertainment One Ltd. (LSE: ETO) AIM listed, Entertainment One Ltd's strategy is to build a leading global independent entertainment content ownership and distribution business which acquires films, television programs and music content and exploits these rights in all media throughout the world. Entertainment One is one of the world’s leading international entertainment companies with operations in Canada, the U.S, Benelux and the UK, where it distributes, acquires and owns filmed entertainment and music content in all medias. Entertainment One also owns Koch Entertainment, the largest independent record label in North America and a leading independent distributor of music and video in the United States. www.entertainmentonegroup.com