Grabs L.A.-based prod'n/sales company for $19.3 mil
MONTREAL — Behaviour Communications has acquired Los Angeles-based production and foreign-sales company MDP Worldwide in a deal worth approximately $19.3 million, Behaviour chairman Richard Szalwinski announced Thursday.
Behaviour was formerly known as Malofilm Communications.
The high-profile indie distrib will change its name to MDP/Behaviour Worldwide and MDP topper Mark Damon will stay on as chairman and CEO of the new entity.
Damon will oversee all of Behaviour’s worldwide production and distribution activities as part of the deal.
Shareholders of MDP Worldwide will receive $5 million in cash, 4.8 million class-B subordinate voting shares of Behaviour on closing of the deal, a $1.2 million note convertible into 1.2 million class-B shares and up to 4.5 million class-B shares over four years, depending on certain financial and operational criteria.
Damon, the principal shareholder of MDP, was in Montreal for the announcement, which was made at the Behaviour annual meeting. The transaction is expected to close within the next two months and is subject to due diligence, regulatory approval and customary closing conditions.
Szalwinski and Damon are also working on another related agreement that will give Behaviour Canadian distribution rights to the majority of pics handled by MDP.
The surprise deal came about in part thanks to Damon’s relationship with Nicolas Clermont, president of Filmline Intl., the Montreal feature production house owned by Behaviour.
Filmline is working right now with MDP on the British-Canadian co-production “Eye of the Beholder,” with writer-director Stephan Elliott and stars Ewan McGregor and Ashley Judd. MDP has world rights to the thriller and Damon foresees doing more U.S.-Canadian co-ventures with Filmline that will allow the companies to take advantage of the tax-credit and exchange-rate advantages of lensing in Canada.
Emerging from disaster
For Behaviour, the purchase marks a major upping of its profile in the worldwide film scene and a signal that it is finally emerging from a couple of years of disastrous financial results.
Behaviour already owns an international film sales company in L.A., Image Organization, and Image will now be under Damon’s jurisdiction as well. Full details of the MDP/Image relationship have yet to be worked out, but Image would likely take care of the lower-budget fare in the slate.
MDP Worldwide has been looking for a strategic partner for several years, said Damon.
In the spring of 1995, MDP announced a joint venture with Toronto-based Alliance Communications, but, though the two companies partnered on a few features, the formal partnership never took off.
“I think that today a truly independent company that is not in the public marketplace and does not have deep pockets finds it very hard to go forward and make the bigger-budget pics that the market demands,” said Damon. “For us, merging with a substantial company that’s already in the public marketplace gives us significant support. It also made sense to do it in Canada. We began to see the benefits of co-producing pictures that would qualify as European-Canadian co-productions.”
Behaviour, which is quoted on the Toronto and Montreal exchanges, has reported huge losses since Szalwinski bought Malofilm from founder Rene Malo two years ago. Last year, Behaviour posted a net loss of $31 million.
Damon admitted he was concerned by all the red ink at Behaviour, but was convinced by Szalwinski and his colleagues that the bleeding was over. MDP is a privately held entity in which Damon is the principal owner.
Behaviour boss Szalwinski said the acquisition of MDP is a key step in the Canadian company’s strategy of growing its interests in the international film biz.
Malofilm used to have an international film sales division, Malofilm Intl., but that unit has not been particularly active over the past two years.
L.A. presence promised
“Behaviour’s mission has always been to be an international company and, over the last year, one of the biggest weaknesses was international distribution and an L.A. distribution presence,” said Szalwinski. “We’re going to grow our L.A. presence. Mark has a significant reputation and he has the ability to attract talent.”
Upcoming MDP pics include “Dog of Flanders,” with Jon Voight and Jason Robards; “Toddlers,” directed by David Zucker and starring Eddie Murphy; and the Jean-Claude Van Damme starrer “Knock Off.”
MDP has a library of more than 50 films, including “Rudyard Kipling’s The Jungle Book.” For the fiscal year ended Dec. 31, 1997, MDP Worldwide had estimated operating revenues of approximately $23 million.
Damon has served as producer or executive producer on a host of films, notably “9-1/2 Weeks,” “Never Say Never Again,” “Das Boot” and “The Cotton Club.”