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StudioCanal buys Kinowelt

Canal Plus subsidiary takes 100%

Gallic major StudioCanal has bought German producer-distrib Kinowelt for an estimated E90 million ($132 million), giving the Canal Plus subsidiary an important foothold in Germany and beefing up Kinowelt’s film muscle.

The companies announced Thursday that the long-mooted takeover had been inked Wednesday. StudioCanal, which was expected to take a majority share in the Leipzig-based firm, has bought 100%.

Kinowelt founders, brothers Michael and Rainer Koelmel, will remain at the company, which is one of Germany’s biggest DVD distributors and also produces and distributes TV and cinema films.

Michael Koelmel will continue to oversee strategy; Rainer Koelmel will head acquisitions.

Deal is subject to antitrust approval. No terms were released, but the reported price includes a bonus linked to Kinowelt’s future profitability, said StudioCanal chairman Olivier Courson.

StudioCanal now owns distribution companies in the U.K., France and Germany — Europe’s three biggest film markets. The French production, sales and distribution company also owns distribs in Benelux, Austria and German-speaking Switzerland.

With Kinowelt, StudioCanal aims to replicate the success at its British distribution company, run Optimum Releasing, which it bought in 2006, Courson said.

StudioCanal’s vast library has enhanced Optimum’s DVD distribution, while its backing has allowed Optimum, once a niche distrib, to raise the ante on acquisitions, purchasing “In the Valley of Elah” last year.

“We’ve increased Optimum’s results fourfold in two years,” Courson said.

A further aim in StudioCanal’s pan-Euro distrib network is to co-produce bigger international movies, Courson added, citing StudioCanal’s involvement in Johnny To’s “The Red Circle” and in the prequel remake of John Carpenter’s “Escape From New York,” which Neal Moritz is producing for New Line and StudioCanal.

Kinowelt will also continue local production under StudioCanal.

StudioCanal, which has a co-production deal with the U.K.’s Working Title, will commit $293.6 million a year to international and local productions, made out of its distribution ops, Courson said.

Another potential growth area is the German home entertainment market, which grew 3% in 2007, in contrast with an 11% plunge in France’s DVD market.

Kinowelt has handled Canal Plus homevideo titles in German-speaking territories since 2000.

Michael Koelmel re-established Kinowelt in Leipzig after it ran into liquidity problems in 2001, having expanded rapidly during the heyday of the Neuer Markt in Germany.

Two years later, it’s once again a big player in Germany, with revenue rising in 2006 by more than 30% to $150 million and profits edging up to $7.2 million from $5 million a year earlier.

Courson ruled out further expansion in Spain and Italy, where the markets are hit by piracy.

“At the moment, I prefer to focus on the integration of Optimum and Kinowelt and the development of international production,” Courson added.

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