Cannes 2012: Relativity Media Set to Buy German Film Studio Senator Entertainment (Exclusive)

Ryan Kavanaugh's film financing group is close to a takeover of the producer-distributor.

CANNES – Ryan Kavanaugh’s film financing group Relativity Media is close to a takeover of German producer-distributor Senator Entertainment.

U.S. sources familiar with the deal told The Hollywood Reporter that Relativity is set to buy a controlling stake in Senator, most likely together with a third-party investor. The agreement is expected to be announced soon.

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Senator is riding high thanks to the blockbuster performance of French culture-clash comedy The Intouchables, which has earned more than $75 million for Senator, beating the performance of the last Harry Potter film in Germany and making Senator the most successful distributor in the territory this year so far. Senator CEO Helge Sasse also has successfully restructured the company’s finances, putting the group on firmer financial ground.

The company has upped its game on the production side, boarding such English-language productions as Julie Delpy’s 2 Days in New York, starring Delpy and Chris Rock, and Anton Corbijn’s spy thriller A Most Wanted Man, featuring Philip Seymour Hoffman.

Late last year, Senator signed an output deal with Relativity, ensuring that Relativity’s entire upcoming slate -- which includes the action thriller Hunter Killer, starring Gerald Butler and Sam Worthington, and Nicholas Sparks’ adaptation Safe Haven, from director Lasse Hallstrom -- will go to Senator in Germany.

A close reading of Senator’s ad hoc release announcing the output deal in December suggests the output deal was planned as the first step in a Relativity takeover.

“Relativity will become an important shareholder in Senator,” the ad hoc reads. “Together, both partners want to build Senator into the leading independent distributor in the German market.”

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Investment group Sapinda Holding, which helped Senator refinance its debt last year, supported the output deal. According to the ad hoc, Sapinda will provide capital to Relativity “for future strategic undertakings,” suggesting that the Amsterdam-based investment fund might be part of a Senator takeover. Because Senator is listed on Germany’s stock market, Senator and Relativity are forbidden from commenting on any deal before it is formerly announced.

If Relativity takes over Senator, it wouldn’t be Kavanaugh’s first international move. Relativity owns IDG China Media, formerly Boston-based International Data Group’s China-focused investment arm, and last year Relativity formed a joint venture in China with Huaxia Film Distribution and Beijing-based Skyland Film-Television Culture Development. The new Chinese firm will handle distribution along with film production and financing in both China and the U.S.