A Capitol venture

L.A. pair take control of U.K. sales co.

Hollywood-based entrepreneurs David Bergstein and Ron Tutor have completed their long-expected purchase of U.K. sales company Capitol Films.

Bergstein and Tutor will merge their production outfit, Mobius Pictures, into Capitol, with the combined group trading under the Capitol banner.

No price has been announced for the deal, which was agreed in principle last June but has taken until now to complete.

Capitol’s co-founders, Sharon Harel and Jane Barclay, and their fellow shareholder Hannah Leader have sold their entire stakes to Bergstein and Tutor.

Barclay, Leader and Nick Hill, who joined recently as co-managing director alongside Barclay, will continue to run the company’s sales, financing and production business from Capitol’s headquarters in west London.

Harel, who owned the largest stake in Capitol, already stepped back from the day-to-day management last year for personal reasons. She now has a first-look producing deal with the company and starts shooting “The Secrets,” starring Fanny Ardant, today in Israel.

For Bergstein and Tutor, the acquisition signals their intention to build a larger integrated entertainment group in Europe and the United States, spanning production, post-production, library management and sales.

They were previously best known for their association with Elie Samaha’s ill-fated Franchise Pictures, but their acquisition of one of the longest-established and best-respected companies in the foreign sales business gives them the chance for a fresh start.

“Capitol has consistently delivered films of the highest artistic and commercial quality to the market,” Bergstein said. “When independent distributors around the world gather at Cannes, the AFM or any of the important festivals, one of the first doors they knock on is Capitol’s. This is a company with an outstanding track record and terrific management. It provides us with a very solid foundation on which to build.”

In the past, Bergstein has specialized in investing in distressed companies, but that’s not the case with Capitol, which has a library of more than 100 titles and reported record profits of £4 million ($7.1 million) in 2005, up from $2.3 million the previous year.

Although it has been known for some time that Harel and Barclay, who co-founded the company in 1989, were ready to consider selling the business, they were under no financial pressure to do so and were determined to hold out for a premium.

“We have gotten to know David and his colleagues very well over recent months,” Harel said. “We are delighted that Capitol will be able to move up a gear under his leadership. It has always been our ambition that the company should form the core of a larger, integrated enterprise.”

Capitol’s current slate includes Robert Altman’s “A Prairie Home Companion,” the third Altman movie in a row to be handled by Capitol after “Gosford Park” and “The Company.”

It also is selling “Alpha Dog,” which closes this year’s Sundance fest, “Lucky Number Slevin,” “Ask the Dust,” “Black Water Transit” and upcoming British teen franchise pic “Alex Rider: Stormbreaker.”

The first joint production from the merged Capitol and Mobius is Gregory Nava’s “Bordertown,” produced by Bergstein and currently in post.

The sale of Capitol was initiated by ICM chairman Jeff Berg, who repped Capitol in the deal. The funding of the acquisition was arranged by Eileen Burke of New York hedge fund D.B. Zwern.

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