Odeon Cinemas, under new ownership, is going shopping. The U.K.’s largest cinema circuit is looking to snap up some of its smaller rivals, following its own $688 million sale last week to a consortium of German bank WestLB, indie distrib Entertainment and property mogul Robert Tchenguiz.

Odeon’s prime targets include multiplexes owned by South Africa’s Ster Century and Australia’s Village Cinemas, and the 270-screen Cine-UK loop.

“Is Odeon interested in expansion? Yes, we are,” says chief exec Richard Segal. “The U.K. cinema sector has moved from a period of rapid new multiplex expansion into an era of consolidation. Under our new ownership, we will explore the marketplace for those opportunities that might exist. We have already carried out some evaluations in the last six months.”

Just about every major U.K. circuit, apart from National Amusements, is on the block. UGC Cinemas, UCI and Warner Village (already in talks for a sale to mini-loop SBC) are too big for Odeon to swallow without falling foul of competition watchdogs, but there are plenty of smaller morsels on the menu. Other potential buyers for U.K. chains include U.S. billionaire Philip Anschutz and Canada’s Onex Corp.

After 18 years of rising admissions, culminating in last year’s 13% hike, some investors see this as a good time to cash their chips. The forecast for 2003 is foggy, with the Cinema Advertising Assn. predicting a 4% rise but some exhibs privately expecting a 10% dip.

So has the WestLB consortium bought Odeon at the peak of the market? They clearly believe not. Segal himself is a box office bull, arguing there’s still much room for growth in a country that lags way behind North America and Australia in per-capita admissions.

The sellers are either debt-laden congloms with an urgent need for cash (Vivendi Universal, AOL Time Warner), or venture capitalists reaching the natural exit point in their seven-year investment cycle. That was the case for Cinven, the private equity group that paid $106 million for ABC Cinemas in 1996, then merged it with Odeon three years ago for another $380 million.

Led by WestLB, Odeon’s new owners are also financial rather than strategic investors. Yet the most intriguing aspect of the deal is the presence of Entertainment, making its first big move in 25 years outside its core distribution business.

The tight-knit family company, run by brothers Nigel and Trevor Green, has long been the U.K.’s leading local distrib. In 2002, it reached the dizzy heights of 16% marketshare, buoyed by its New Line deal and pickups such as “Gosford Park” and “My Big Fat Greek Wedding.”

The savvy Greens have long hankered after a foothold in the exhibition business. It was they, in league with Odeon’s management, who brought the deal to WestLB and Tchenguiz. It shows just how discreetly the Greens operate that no one else within their company (apart from their assistants) knew until the ink was dry.

All involved insist this is not about building a vertically-integrated British studio, a 21st-century version of Odeon’s original owner, Rank. Entertainment is only a minority partner, and no preferential treatment will be given or sought for the distrib’s movies on Odeon’s screens. (That would, in any case, be illegal.)

Nonetheless, this alliance between the historic flagship of British cinema and the country’s top indie film company has a certain resonance. For all their diffidence, and the pragmatic foundation of their success upon U.S. product, the Greens have a strong patriotic streak. Now, for the first time, they have acquired a vested interest in the wider performance of the British movie business, beyond their own releases.

The Odeon deal, however financially motivated, is a step toward the Greens assuming a larger leadership role within the British film community. Having finally taken the plunge into exhibition, their next challenge will be to flesh out their equally long-held production ambitions. If only they can find the time.

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