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Technicolor on the block
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May 15, 2000: 8:22 a.m. ET
Carlton appoints adviser on sale of film processing unit for up to $2.6B
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LONDON (CNNfn) - Carlton Communications on Monday began the disposal of film processing unit Technicolor, appointing investment bank UBS Warburg to conduct a sale of the business. Sources indicated the unit might fetch as much as £1.7 billion ($2.6 billion).
Carlton, one of Britain's leading commercial television broadcasters, plans to merge with United News & Media (UNWS) in a £7.8 billion deal unveiled last November and still under review by competition authorities. The companies said at the time of the merger announcement they would divest non-core operations to focus on their TV business. 
Carlton said Monday Technicolor generated revenue of $1.5 billion and operating earnings of $378 million in the 12 months ended Sept. 31. The company is the world's largest processor of film for the motion picture industry, and produces video cassettes and new digital entertainment media such as digital versatile discs, compact discs and CD-ROMs. A source close to the company indicated the price range for Technicolor would probably be in the £1.2 billion-£1.7 billion range. No timetable has been set for completing the deal.
The Financial Times reported Monday the sale would be keenly contested, because Carlton has elicited interest from potential financial buyers intent on exploiting the firm's strong cash flow, as well as trade purchasers keen to broaden their activity base and exploit the legendary brand name. The newspaper identified possible buyers, including Germany's Bertelsmann, Japan's Matsushita, Canada's Cinram and Time Warner (TWX: Research, Estimates), the parent of CNNfn.com.
The firm will be sold as a single entity, even though there are three separate strands to the business, including a sizable distribution operation. The new digital operations represent the more exciting aspect of the company's activities, but it is likely to be rivaled in this arena by a variety of new competitors.
The other main player in the film processing business is Deluxe, owned by Britain's Rank (RNK), but Deluxe is unlikely to be an interested party on the grounds that such a purchase would almost inevitably run foul of antitrust concerns.
Carlton (CCM) stock rose 0.6 percent to 762.5 pence in London Monday. 
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Technicolor
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