Buyout Firms Eye Debut On West End Stage
Some of the world's biggest private equity firms are mulling takeover bids for the company behind the landmark London theatres that are home to productions including The Lion King and Dirty Dancing.
Sky News has learnt that half a dozen investment groups have been given access to financial information about Ambassador Theatre Group - owner of venues including the Donmar and Lyceum - meaning that a controlling stake in the company could change hands within months.
The interested private equity funds are understood to be BC Partners, Blackstone, Carlyle, Charterhouse, Lion Capital and Permira, which collectively manage tens of billions of pounds of investments.
Ambassador's majority shareholder, Exponent Private Equity, has invited the firms to consider making offers ahead of a wider auction that had been planned for early next year.
A number of international theatre groups are also understood to be interested in examining Ambassador's books. Any buyer is likely to want to see the company's performance during the crucial Christmas trading period, which accounts for about half of its annual trading profits.
Exponent acquired a roughly 55% stake in the UK's largest theatre operator in 2009 in a deal valuing it at just over £130m. The remainder is owned by a number of wealthy individuals and Ambassador's founders, Howard Panter and his wife, Rosemary Squire.
Ambassador's minority investors are said not to be keen to sell their shares as part of the current sale process, but one insider said the existing shareholder agreement contained a clause known as drag rights, which may mean that any buyer of Exponent's stake has the power to compel other investors to sell at the same time.
UBS, the Swiss bank, is handling the sale, which is likely to value Ambassador at between £250m and £350m. Exponent is expected to make a handsome return on its investment, which could also reap a windfall for Greg Dyke, the former BBC director-general who now chairs Ambassador as well as the Football Association.
The company owns about a dozen venues in London's theatreland, which are staging productions such as Jersey Boys, which is transferring to Ambassador's Piccadilly Theatre in March next year.
The Lion King, which is staged at the Lyceum, is one of the West End's most successful and long-running musicals.
In total, Ambassador owns 39 venues in Britain. It was established by Mr Panter and Ms Squire in 1992, and sold to Exponent four years ago in a deal that combined the existing ATG and the theatre portfolio of Live Nation, the American entertainment giant.
Since then, the company has expanded through bolt-on acquisitions including its debut appearance on New York's Broadway this year, when it paid around £40m to buy the Foxwoods Theatre, home to Spiderman: The Musical.
A sale process will take place at a buoyant time for London's theatre industry. Ambassador saw a 17% surge in sales to £111m in the 12 months to March 2012, while operating profits during the same period rose nearly 70% to £15.5m. Both measures are understood to have grown again during the subsequent 12 months.
Overall West End ticket sales were up in 2012 for the ninth consecutive year running despite an anticipated decline during the London Olympics.
Fears about the economic environment and the Games proved relatively unfounded with attendance increasing to almost 14m, up 0.56%, and box office sales setting a new record of £530m, up 0.27%.