Saturday, 13 June 2009

LOVEFILM.COM on sale for up to £200M after six years ...

THE online DVD rental firm Lovefilm has been put up for sale for an estimated £200m, which could provide a £14m windfall for the company’s management.

The business has grown rapidly since its inception six years ago and has recently received a number of bid approaches. It has hired Jefferies, the investment bank, to advise on these and work on a possible sale.

Lovefilm, with 1.2m members, has become the market leader in mail-order film rental. It has bought out most of its rivals, including a deal last year to acquire the European rentals operations of Amazon, the internet retailer, for £63m.

At its launch, Lovefilm was one of several firms, such as Video Island and Screenselect, started by entrepreneurs offering a similar type of service. Lovefilm has picked these off, and today accounts for more than half of all DVD rentals in the UK. It is testing a video-on-demand service that allows customers to down-load films straight on to their computers.

Lovefilm’s management, led by chief executive Simon Calver, owns a 7% stake in the business. Amazon is a 32% shareholder after last year’s deal, while the rest of the shares are owned by venture-capital firms and business angels.

Lovefilm said: “The company has received a number of approaches and the board is exploring options on behalf of the group and its shareholders. The company cannot comment any further.”
Analysts suggest that a private-equity firm is most likely to buy the company.

Lovefilm’s latest accounts, due to be published shortly, are expected to show that the group generated turnover in 2008 of £73m. It is understood to be on course for more than £100m this year.

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