Swedish cinema chain SF seen on block early next year-sources

Thu Dec 20, 2012 10:26am EST

* Nordea lined up to advise on sale

* Deal could be worth about $300 mln

By Sven Nordenstam

STOCKHOLM, Dec 20 (Reuters) - Swedish media group Bonnier wants to sell its SF cinema chain early next year and has lined up Nordic bank Nordea to advise on a deal that could be worth about 2 billion crowns ($306 million), sources familiar with the matter told Reuters.

Possible bidders include private equity firms which have previously shown interest in the sector, such as Sweden's Ratos which owns Finnkino, the biggest cinema chain in Finland and the Baltic countries.

A number of international private equity firms which also own or have owned stakes in the sector, such as Terra Firma , Doughty Hanson and Blackstone, could also be potential bidders.

Privately-held Bonnier declined to comment, as did Nordea.

Doughty Hanson owns Vue, one of Britain's largest cinema operators, which expanded in Europe this year through the purchase of Germany's Cinemaxx with its 34 cinemas spread across Germany and Denmark.

Terra Firma owns Odeon & UCI Cinemas Group, Europe's biggest movie theatre chain, while Blackstone used to own Cineworld which is listed in London.

Another interested party could be BC Partners which was one of the final bidders for Vue before it was sold to Doughty in 2010 and which showed interest in Odeon after that.

SF operates more than 40 cinemas with a total of about 38,000 seats, most of them in Sweden and the rest in Norway.

SF's Swedish cinemas had revenues of 1.4 billion Swedish crowns last year and generated earnings before interest, taxes, depreciation and amortisation (EBITDA) of just over 180 million crowns.

If the Norwegian cinemas have the same level of profitability, the combined Swedish and Norwegian businesses could generate annual earnings of about 220 million crowns.

The valuations of Cineworld and Warsaw-listed Cinema City , as well as those in deals for Vue and cinema chain Picturehouse, range from 7.5 to 9.5 times full-year EBITDA, on a debt-free basis.

Using the same multiples, the SF cinemas would command a value of between 1.7 billion and 2.1 billion Swedish crowns based on last year's earnings.

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