A1 has closed the deal with Formula Kino
Alfa Group has become the largest cinema owner in Moscow
Alfa Group Consortium has acquired a 55.66% interest in Formula Kino (literally “movie formula”) cinema network that manages 90 cinema halls. Taking into account Kronverk Cinema which is controlled by it, Alfa Group is now the largest cinema operator in Moscow and the second-biggest in the Russian Federation, holding a greater than 7% share of the market.
А1 Investment Company (Alfa Group’s investment arm) has acquired 55.66% shares of stock in Formula Kino, according to the company’s official statement. The President of А1 Mikhail Khabarov told that several companies that owned and managed Formula Kino cinemas were involved in the transaction. According to SPARK-Interfax, the shareholding structure is identical in most of the companies composing the network (for instance in OOO Kinomir-21 Century that owns Formula Kino U.K. managing company): a 44.34% interest is held by Etaxe Consulting Corp., 33.33% by Orgate International Inc. (both incorporated in Belize), 11.33% by Hyfield Financial Group Ltd, 11% by Warston Holdings Ltd (both incorporated in on the British Virgin Islands). Mr.Khabarov explained that А1 had bought out the shares of stock previously held by three of the four Formula Kino shareholders. Another source close to the transaction specified that Vladimir Kiselev, Oleg Vojush and Yuri Gagarin sold their shares of stock. Etaxe, the fourth shareholder who held the largest share of stock until lately, also represents itself as a private person that is not related to any large financial structures.
Mikhail Khabarov told that Formula Kino would amalgamate with Kronverk Cinema network owned by А1, after which amalgamation the share of stock held by the remain minority Formula Kino shareholder would be converted into a share of stock in the amalgamated company.
As of 1 December 2011 Formula Kino holds the sixths line in the Nevafilm Research’s rating of Russian cinema networks (see the schedule) in terms of number of cinema halls with its 88 halls at 14 cinemas, Kronverk Cinema holds the fourth line with its 103 halls at 15 cinemas (the network owns another two cinemas with 17 halls in Ukraine). This positioning has not changed over the last months though Formula Kino has opened two more halls while Kronverk Cinema has opened 10 more. I.e. now А1 will become the market leader in terms of number of halls belonging to it in Moscow, leaving behind Karo Film, and the second largest operator in Russia after Cinemar Park. А1 is not planning to any new purchases and will focus on organic growth: in 2012 at least 56 more halls are going to be opened at six new cinemas, three of them in Saint Petersburg and one in each of Krasnodar, Ryazan and Syktyvkar.
SPARK-Interfax reported revenues received by OAO Epos (the managing company of Kronverk Cinema) in 2010 to amount to 796 million rubles and its net profit to 23.2 million rubles. Financial results achieved by Formula Kino have not been disclosed. Mikhail Khabarov has just mentioned that these are “networks standing on the same level with a like revenue and EBITDA”.
Approximate price of the latest transactions in which European cinema networks were involved was €800 thousand (over 32 mil. rubles) per one hall, reminded the General Director of Nevafilm Research Oleg Berezin. I.e. Formula Kino could be valued as worth €72 million, but given that all its cinemas are located in Moscow, the value may exceed €100 million (about 4 billion rubles), suggested Mr. Berezin.