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Bain backing buyout of DIC

Nine-digit deal to close by month's end

Walt Disney Co. has inked an agreement in principal to sell animated kidvid producer DIC Entertainment in a management buyout led by longtime DIC topper Andy Heyward and backed by investment firms Bain Capital and Chase Capital Partners.

Pending deal is valued in the nine digits. Details were not available, but Bain and CCP would get substantial equity stakes in DIC.

Transaction is expected to close by month’s end. The Endeavor talent agency facilitated the negotiations, with Allen & Co. acting as DIC’s investment banker.

Second fiddle

Disney picked up a majority stake in Burbank-based DIC in its 1995 acquisition of ABC/Capital Cities. But the toonery has been something of a poor stepsister to the Mouse House’s own animation operations ever since.

“It’s the kind of thing where every now and then somebody says, ‘Oh, do we own DIC?’ ” a source said.

Disney co-produced and distributed a live-action movie based on DIC’s animated series “Inspector Gadget” last year, and similarly partnered on its live-action “Meet the Deedles” feature in 1998. DIC’s other TV fare includes animated series such as “G.I. Joe,” “ALF,” “Bill & Ted’s Excellent Adventures,” “Dennis the Menace,” “Where’s Waldo?” and “Where on Earth Is Carmen Sandiego?”

Heyward acquired DIC in 1986 from French media group CLT. He retained a small minority interest in the company after ABC/CapCities acquired its stake in 1993.

Buyouts Bain’s bag

Bain, best known for industrial and retail buyouts including the 1998 acquisition of Domino’s Pizza, has dabbled in entertainment in recent years. The Boston-based firm’s highest-profile acquisition came in 1997, when it bought video distributor Live Entertainment and transformed it into theatrical distributor Artisan Entertainment. (Bain’s Geoff Rehnert and Marc Wolpow exited the firm in July 1999 to form Audax Entertainment, which acquired Bain’s Artisan stake last September.)

CCP is a venture capital unit of Chase Manhattan. It has investments in entertainment companies such as music distrib Alliance Entertainment, music venues proprietor House of Blues and theme parks operator Six Flags.

“It’s very difficult to come in and take a small, independent Hollywood company, turn it around and build it into something big,” said analyst David Davis, a senior veep at investment firm Houlihan, Lokey, Howard & Zukin in Los Angeles. “But you can’t argue with Bain’s success with Artisan, where they’ve taken a small independent film and video company like Live Entertainment and turned it into a virtual mini-major.”

Of the pending DIC sale, Davis added, “Disney doesn’t need a competing television animation group.”

Officials at companies involved in the deal declined comment.

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