Alfa Group Was not Inspired by Turkish Iira
The Consortium has sold the AFM Cinemas network
The Russian Alfa Group Consortium sold the Turkish AFM Cinemas network to ESAS Holding belonging to the family of a Turkish billionaire, Şevket Sabancı, for $82.39m. After that ESAS united AFM with Mars Sinema, the largest movie theater operator in Turkey.
The A1 Company (the key investment division of the Alfa Group Consortium) left the composition of shareholders of the Turkish AFM movie theater network as far back as last summer, two sources in the Consortium told Kommersant. It is also confirmed by documents published on the website of the Turkish ESAS Holding (which is controlled by the family of billionaire Şevket Sabancı), the buyer of the network. According to the message of ESAS, the holding purchased from Eurasia Cinemas B.V. (which controls movie theater assets of A1) 88.01% of AFM Uluslararasi Film Produksiyon A.S. (managing company of the network) for $82.39m.
AFM, the second-large cinema network in Turkey which was founded in 1965, has 193 screens at 27 cinemas. In 2010 the revenue amounted to 96.955m Turkish liras (about $61m); the net profit was 3.516m Turkish liras (about $2.2m).
Earlier the A1 Investment Company considered the owner of only 51.9% of the AFM shares. The investment division of Alfa Group purchased these shares in 2007 from shareholders of the network, including AIG Blue Voyage Fund L.P. The transaction amount was not disclosed, however when signing the sales agreement the capitalization of AFM on the Istanbul Stock Exchange was $61.7m, that is 51.9% of the network could be approximately $32m. As follows from the data of ESAS, Eurasia Cinemas later bought additional 36.11% on the exchange.
The moment for the sale was successful, Edward Pichugin, the founder of Kronverk Cinema, considers. For only 2010 the Turkish film distribution and exhibition market increased by 24.5%, up to 383.37m Turkish liras (about $243m), and the increase reached 58.17% in comparison with 2007. According to yesterday's quotations, AFM is estimated already at $181.45m, that is the network rose in price almost three times for four years.
As follows from the data of AFM, last year in November the main owner of the network changed again – the movie company Mars Sinema ve Sportif Tesisler Isletmeciligi A.S (part of Mars Entertainment Group, which also manages fitness centers in Turkey and is controlled by the local investment fund Actera Partners) became the owner. In exchange for AFM, ESAS received a share in the Mars Sinema network, which outrun AFM in 2010 in relation to the number of cinemas in Turkey (28 with 232 screens).
A1 will continue to develop its movie theater business in Russia and Ukraine. It possesses 100% of the fourth-large Russian cinema network Kronverk Cinema founded in 2001 by Edward Pichugin. In 2006, according to expert evaluations, A1 spent about $45m for its purchase. Now the network consists of 16 cinemas (eight of which are in St. Petersburg, four are in Moscow, and one is in Ukraine). In May, the network management was changed: the CEO position was taken by Andrei Tereshok, who managed the Formula Kino Company before, and Vitaly Podolsky, president of the French network of gourmet food boutiques Hediard, became the Chairman of the Board of Kronverk Cinema. The shareholders set a task for the new management: to have doubled the number of screens in the network by 2013 – up to more than two hundred. As Andrei Von, the managing director of the A1 Investment Company, told Kommersant earlier, the strategic development of Kronverk Cinema can include M&A transactions with other Russian cinema networks. Whether A1 retained an interest to foreign markets was not commented by the Company yesterday.