- Canal+ to take 34% minority stake
- Deal could lead to full control from 2028
- Studio and back catalogue attractive
The French media giant behind film hits such as Bridget Jones and Paddington, Canal+ (CAN), has announced it is in exclusive talks to take a minority stake in cinema chain UGC for an undisclosed amount.
UGC is a leading French cinema and audiovisual production group with one of France's strongest cinema chains and content libraries and has 55 theatres (48 in France and seven in Belgium).
Following the purchase of a 34% minority stake, Canal+ would have the option to take full control of UGC from 2028 subject to the agreement of UGC’s other shareholders.
Although the move is one of the biggest strategic since the film group joined the London Stock Exchange last December in the biggest IPO of 2024, the shares were barely changed on the day.
WHAT DID THE CEO SAY?
Canal+ chief executive Maxime Saada said: ‘Since its creation in 1984, Canal+ has been the number one partner and supporter of French and European cinema.
‘UGC has built a remarkable network of theatres, an exceptional library of content and outstanding IP (intellectual property).
‘The growth of StudioCanal, led by Anna Marsh, is a priority for the Canal+ group, and combining our business with UGC would enable us to accelerate this development.
‘This transaction demonstrates the group's commitment to cinema and theatrical exhibition, which play a vital role in showcasing and enhancing the value of films.’
STRATEGIC MOVE
Russ Mould, investment director at AJ Bell said: ‘Canal+ entering exclusive talks to take a minority stake in French cinema chain UGC is perhaps its biggest strategic move since joining the London stock market late last year.
‘The deal, which could be a precursor to taking full control of the business in 2028, would represent something of a departure for the company and may lead to some nervousness among investors.
‘Cinemas have had a tough time during and after the pandemic, and there have been several examples of participants in this space struggling in recent years.
‘UGC is not just a cinema operator, it is also a film studio, and it is the library of content it holds which may be the biggest draw for Canal+.
‘Attracting eyeballs to its streaming platforms means having a broad spread of different shows and films that can appeal to as wide an audience as possible.’
DISCLAIMER: Financial services company AJ Bell referenced in this article owns Shares magazine. The author of this article (Sabuhi Gard) and the editor (Ian Conway) own shares in AJ Bell.
