EMI surprises Wall Street
As the second round of the Polygram Filmed Entertainment auction gets under way, Artisan Entertainment and Venezuela’s Cisneros Group have emerged as two last-minute bidders for the company.
Artisan joins Canal Plus, EMI, Carlton Communications and an investment group headed by execs Neil Braun and Martin Tudor as likely candidates to start due diligence on PFE later this week. The status of Tom Rosenberg’s Lakeshore Entertainment bid is uncertain, and final decisions on the second round have not yet been made.
Cisneros has not made a formal play for Polygram but has made it known to several entrants that it is interested in teaming up on a joint bid.
Goldman Sachs, which is advising Seagram Co. on the sale of PFE, is currently deciding which of the 10 original bidders for PFE should proceed to the next round.
Some too low
Some bidders did not put a high enough valuation on the company in their initial expression of interest, which had to be submitted by July 30. Others were deemed not serious enough.
While Lakeshore is serious, the bidder is still negotiating about whether it will get to do due diligence.
PFE is being sold as a result of Seagram’s $10.2 billion acquisition of Polygram Holdings. Goldman and a tripartite committee representing PFE, Seagram and Philips — Polygram’s former owner — are overseeing the sale.
Aside from the known bidders, other companies are still circling PFE. Despite earlier reports, U.K. media group Pearson did not actually put in a bid for PFE, but people close to Pearson say the company may re-enter the auction later, possibly in partnership with another bidder.
Management presentations from PFE execs are already under way. After that, bidders will spend time in a “data room,” poring over PFE’s finances, a process which investment bankers say will last several weeks.
Wall Streeters said the surprise about the group of bidders is the strong showing of U.K. music giant EMI, which has itself been the subject of takeover speculation.
Fast-expanding Cisneros runs a $500 million investment fund, Ibero-American Media Partners, together with Dallas-based firm Hicks, Muse, Tate & Furst. In June, Cisneros led a $70 million buyout of Portuguese TV network Televisao Independente.
Artisan’s emergence as a serious bidder is not that surprising, in that it has examined buying several film companies since a consortium headed by Bain Capital bought control of the company last year and restructured its finances.
Artisan owns a minority interest in foreign sales and financing company Summit Entertainment, which it has signaled it intends to convert into full ownership at some point. Artisan also has one of the largest independent film libraries, consisting of around 2,600 titles.
Sources say Artisan wants to eventually team up with another bidder, such as Canal Plus or Cisneros, to spread the cost of the acquisition. The value of PFE is unclear, with expressions of interest ranging anywhere from $700 million to $1 billion.
Artisan execs would not comment.