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Barco Joint Venture w/ China Film Co. Ltd

Barco [1], the global leader in cinema technology, announced today that it has reached an agreement to enter into a strategic joint venture with China Film Co. Ltd., Appotronics and CITICPE. The joint venture will serve as the dedicated commercialization solutions channel for each company’s products and services for the global cinema market excluding mainland China.

Having largely completed the transition to digital cinema over the past decade, the global cinema industry is facing two primary catalysts that are propelling its next stage of growth.

First, exhibitors are increasingly focused on differentiating the moviegoers’ experience, which is driving demand for premium formats and new technologies.

Second, as the first generation of digital projectors begins to age and as Virtual Print Fees (VPF) agreements begin to expire, exhibitors are demanding tailored solutions that allow for flexibility in maintaining, upgrading and deploying their visualization infrastructure while ensuring asset optimization and lowering total cost of ownership.

Leveraging Barco’s market leadership in the cinema market and combining for aggregating the strengths and capabilities of each partner, the joint venture will provide exhibitors and partners a comprehensive portfolio of cinema technology solutions, products and services, encompassing:

The joint venture is expected to become effective during the second quarter of 2018 after customary regulatory approvals have been obtained and following consultation with the relevant social and governmental entities. In a first phase, Barco and Appotronics will start cooperating on selling retrofit modules and projection equipment followed by the addition of CITICPE and China Film Co. Ltd’s premium movie solutions later in the year.

Under the terms of the agreement, the partners plan to capitalize the joint venture in the amount of $100 million. Once all partners have entered the joint venture, Barco will own 55% of the joint venture, Appotronics and China Film Co. Ltd. will each own 20% and CITICPE will own 5%.

Wim Buyens, General Manager of Barco’s Entertainment division for the past seven years, will be appointed as CEO of the joint venture.

Barco will serve as a strategic OEM partner for the joint venture, while retaining full ownership of assets and capabilities related to product management, R&D and manufacturing of all cinema projection and image processing technologies.

Barco plans to spin out its current cinema related sales, marketing and services functions from its Entertainment division into this new joint venture.

Under this new organizational structure, the joint venture will build out dedicated processes and capabilities as it delivers innovative services and solutions to its channel partners and exhibitors. Once effective, the financial results of the joint venture will be consolidated into Barco’s financial results.

China Film Co., Ltd. (Shanghai Stock Exchange: 600977) (China Film) was founded in 2010 by China Film Group Corporation in alliance with 7 other organizations. The company has four businesses: production, distribution, exhibition and film service, which encompasses film & television production, distribution, screenings, cinema chain, movie theaters and equipment. China Film has the largest digital film distribution management platform in China and a dominant position in the field of digital film distribution. China Film owns seven holding and joint-stock cinema chains and over 100 holding theaters. The China Film premium cinema solution is leading in the world, has been installed in over 200 theaters around the world, including United States, Indonesia, India, the United Arab Emirates, Taiwan and other regions.