Screenvision Entering Final Round of Bidding

The robust auction for Screenvison is heading into the final stages, according to a source close to the process.

The cinema advertiser’s parent company, Thomson SA, announced in January that it would divest Screenvision, and also is selling Premier Retail Networks (PRN), which it purchased from Shamrock Capital Advisors in 2005 for $285 million (Shamrock did quite well on the deal, investing just $35 million from its first fund in 2001).

UBS is running the auction process for Screenvision. The firm declined to comment.

Based in New York, Screenvision runs an in-theater network of advertisers. In other words, they do those annoying ads you’re forced to endure before the movies. The company’s network focuses on independent theaters and has an Ebitda “in the ballpark” of $40 million.

Screenvision was widely shopped to private equity suitors and received strong interest, three sources said. Bidding has been narrowed to a small group of bidders which includes strategics for the third and final round in the coming weeks. A source whose buyout firm passed on the deal because of pricing said Thomson was seeking a valuation of 7x Ebitda.

Screenvision’s main competitor is National CineMedia, which Madison Dearborn Partners took public in 2007. The buyout firm still holds a preferred shares in the business. Movie theater chain Regal Cinemas is also a minority shareholder in National Cinemedia and the long-term partnership between the companies enhanced National CineMedia’s appeal in its IPO. Taken into account the preferred shares still owned by Madison Dearborn, National CineMedia trades at around 10x Ebitda, a source said.The company’s year-to-date operating margins are around 43%. Screenvision is healthy, growing and profitable, but its margins “are nowhere near that,” a source said.

In fact, some buyers were spooked by Screenvision’s lack of long-term contracts and consolidation within the independent theaters it serves.Despite that, the process recieved strong interest. One source argued that consolidation in the industry has largely slowed in recent years and Screenvision has continued to steadily grow its “screencount.”