Allen & Co. appears to be dickering with two main suitors for Artisan Entertainment, as an auction for the company enters the get-real phase.
Allen and Harris Williams, another investment bank, have been fielding offers on behalf of Artisan’s current owners.
The firms had set a deadline of Friday for a new round of offers, following an earlier round that drew 18 or so non-binding bids.
Only a handful of the initial bidders apparently followed up with second-round offers. Marvel has yet to place any bid, but Allen still hopes to convince brass of the comicbook giant to do so.
Largely because any Marvel offer would be heavily based on company stock, Allen is simultaneously mulling a cash-rich bid from a group led by film producer Stanley Jaffe and former USA Film prexy Scott Greenstein.
But that offer is apparently substantially lower than a prospective bidding range being discussed with Marvel. First-round bids for Artisan were designed primarily to gain access to due-diligence documents and thus tended to come in high. But due diligence has shown Artisan’s otherwise robust cash flow is hampered — as it is at many other entertainment companies — by relatively high overhead.
Current Artisan owners such as Boston equity firm Audax are said to view Marvel as their best hope for securing an attractive valuation for the Gotham film company.
Marvel execs Ike Perlmutter and Avi Arad are known to be keen on Artisan, with whom Marvel is producing two pics, “Iron Fist” and “The Punisher.”
However, Allen was unable to lure Marvel brass to the investment firm’s exec confab in progress in Sun Valley, Idaho.
And the Jaffe-Greenstein group, backed by notable investment firms Bear Stearns and Thomas H. Lee, appears to have placed the highest bid among offers received to date.
Estimates from other Artisan suitors peg second-round bids at just $100 million-$150 million, excluding assumption of some $75 million in company debt.
That’s far below the range being discussed with Marvel, but a source close to the comics giant characterized a report of a $300 million Marvel bid as “absurd.”
Artisan has about $40 million in annual cash flow, but its free cash flow — accounting for overhead — is only about $8 million. When due diligence turned up that tidbit, much of the first-round interest went notably limp.
The first round of offers was dominated by bids from private equity firms, but several of those groups had prospective new Artisan management attached.
Reports number former Artisan chief Mark Curcio, ex-BMG Entertainment boss Strauss Zelnick and onetime UPN topper Dean Valentine among them.
Artisan chief Amir Malin sits on a board overseeing the auction, and it’s known he would prefer to keep current management intact.
That may be part of the reason first-round bidder Lions Gate Entertainment was refused participation in the due-diligence phase of the auction. But it’s also believed Lions Gate came in at the low end of first-round bidding.