Investment banking firm Warburg Pincus Equity Partners reached an agreement in principle Jan. 19 to acquire 51% of Four Media Company (4MC), a Burbank-headquartered publicly traded postproduction holding corporation, in a deal valued at $80 million. The same day, Jeffrey J. Marcketta, former executive VP/CFO of Panavision, New York, was named to the newly created position of 4MC president/chief administrative officer.
4MCs holdings include Encore post/visual effects facilities in Hollywood and Santa Monica; FilmCore Editorial, Santa Monica and San Francisco; POP Studios, Santa Monica; FilmCore Distribution, Hollywood and San Francisco; Video Symphony, Hollywood; 4MC, Burbank; Company 3, Santa Monica; Digital Magic, Santa Monica; Anderson Video, Universal City; and 4MC Asia, Singapore. Prior to the Warburg Pincus announcement, 4MC projected revenues of $210 million for this fiscal year (ending in August).
Per the agreement, Warburg Pincus would acquire 10.2 million shares of 4MC common stock, comprised of both newly issued and existing shares. Investor Michael Steinhardt, who co-founded 4MC with chairman/CEO Rob Walston in July 1993 (the company went public in February 97), would relinquish his stake in the company-3.1 million shares-as part of the deal, according to Sandra Mays, VP, investor relations, at 4MC.
We are very pleased to have Warburg Pincus as a major shareholder in Four Media Company and look forward to benefiting from their experience with entertainment-related companies as well as providers of business services, Walston said in a released statement. Over the years, Warburg Pincus has invested in such entities as Twentieth Century Fox, Orion Pictures and several cable companies.
This equity investment demonstrates their confidence in Four Media Company and provides us with equity capital with which to pursue our long-term strategy, Walstons statement said. We look forward to quickly deploying this new capital to continue our successful program of providing the latest equipment and highest quality.
Mays said that, for 4MC, the deal was designed primarily to raise the capital necessary to make new company acquisitions. Within a couple of months of the close well see activity, she projected.
Walston could not be reached for comment at press time. But in a recent interview with SHOOT (12/4/98, p. 32) he revealed his intention to acquire additional companies this year. He expressed a desire to grow 4MCs presence in Southern California and penetrate additional cities and countries.
In that interview, he also expressed a commitment to properly prepare 4MC companies for the digital future, stating, I could see spending $10 million each year for the next five years to add HDTV capabilities. In fact, an HDTV center is scheduled to open in March at the Encore Hollywood space.
Marcketta held his post at Panavision for six years. For two years before that, he was based in London, where he served as president of Panavision Europe. Before joining Panavision, Marcketta was a principal with Ernst & Young, New York.
