Barclays Private Equity acquires The Mill, the market leading visual effects company, from The Carlyle Group for £119m

Barclays Private Equity (“BPE”), one of Europe’s leading mid-market private equity investors, today announces that it has acquired a majority stake in The Mill (“the Company”), the award-winning video content business for global brands and advertising agencies, from global alternative asset manager The Carlyle Group (“Carlyle”) in a transaction that values the Company at £119m.

The Mill is best known for producing sophisticated digital visual effects for major brands including Nike, Ford, T-Mobile, Sony, Adidas, Lynx and Barclaycard. For Nike, The Mill helped create an epic 3-minute advert called ‘Write the Future’ that had its worldwide debut on Facebook during the 2010 football World Cup and, within two weeks, received a world-record 14 million hits on YouTube.

Established in 1990, The Mill provides digital visual effects (“VFX”) for advertisements made for television, the internet, outdoor advertising screens and mobile devices. The Company has offices in London, New York and Los Angeles, employs 625 staff and has a client list that includes all the leading advertising holding companies (Omnicom, WPP, Publicis Groupe and Interpublic) and agencies such as AMV BBDO, Ogilvy, BBH and McCann. The Mill also works for broadcasters and television production companies such as the BBC, Shine and Impossible Pictures on dramas including Doctor Who, Merlin and Primeval and for games developers and publishers including Sony Computer Entertainment and EA.

Carlyle Europe Technology Partners (CETP) acquired The Mill with its Senior Management team in February 2007.  Its backing supported The Mill in embarking on a series of new strategic growth initiatives including developing its core strengths in the advertising VFX segment, developing its offering for interactive channels and video gaming, opening a new office in Los Angeles and expanding its geographical reach with a focus on Asia.

The development of The Mill into an industry-leading digital content business mirrors the strong growth trend in television advertising expenditure and the emergence of video-rich content as the largest contributor to online advertising growth.*

 In the year to 31 December 2010, The Mill generated revenues of £74.2m. The Company is a leading player in the VFX segment of the video and brand communications market in the UK and USA and a growing presence in emerging markets. This was recently enhanced with the opening of a joint venture in Singapore with the UK-headquartered creative agency BBH. The senior management team of The Mill is led by its co-founders; Chief Executive Robin Shenfield and Chief Creative Officer Pat Joseph, who will remain with the Company following the transaction.

BPE’s funding will be used to support the Company’s:

• continued organic growth, especially meeting increasing client demand for VFX services in Los Angeles where it is moving to a new and bigger location in July


• opportunities in adjacent markets such as digital advertising and creating cinematic sequences for video games


• further expansion into emerging economies, such as those in Asia and South America

Steven Silvester, Director at BPE, commented: “The Mill is a very exciting company in a dynamic and growing sector.  Its management team is first class and has successfully grown the business over a long time period through a continued commitment to creative excellence and a strong focus on  the advertising market.

 “BPE believes that the changes in the advertising market and the proliferation of the opportunities for brands to interact with their customers via the moving image play to The Mill’s core strengths and provide a very attractive opportunity for the Company.  The Mill is a leading player in its field and well positioned to capitalise on the emerging market trends.  We look forward to assisting The Mill in building on its core strengths in the advertising VFX segment and developing its offering for interactive channels, video gaming and further strengthening its geographical reach with a focus initially on Asia.”

Robin Shenfield, Chief Executive of The Mill, said: “The rapidly growing demand for creative moving image content across all platforms has been a huge driver for us over the last few years, allowing us to generate good revenue growth even through the economic downturn. We are delighted that Barclays Private Equity shares our vision for future growth. Their support will enable us to realise our potential across high growth areas in digital video content for the web, mobile and video games and to expand geographically into key emerging markets such as China, India and Brazil.”

Robert Easton, Managing Director and co-head of Carlyle Europe Technology Partners, said: “The Mill has proved to be an excellent investment for Carlyle, having delivered strong growth and robust performance even through challenging economic times. We congratulate Robin and his team for their extraordinary achievements over the past four years, in which time revenues have almost doubled and headcount has increased by 150%, and we are particularly proud of the role we have played in the company’s growth and development. We wish The Mill and Barclays Private Equity every success with the business going forward.”

Debt financing for the transaction was provided by Lloyds Bank Corporate Markets Acquisition Finance, Bank of Ireland and GE Capital.

Advisors on the transaction included: advising Barclays Private Equity – KPMG (financial advice), Value Partners (commercial due diligence), Marlborough Partners (debt), Clifford Chance (legals), Deloitte (tax) and Heath Lambert (insurance); advising the vendor (Carlyle) - Harris Williams & Co (financial advice), PricewaterhouseCoopers (vendor financial due diligence), Travers Smith (legals); advising management – Jamieson Corporate Finance (financial advice), Dickson Minto (legals) and Deloitte (tax); advising the banks – Hogan Lovells (legals).

Images for Nike ’Write the Future’, T-Mobile ‘Welcome Home’ and Lynx/Axe ‘Even Angels Will Fall’ are available on request.

 *Zenith Optimedia Group’s March forecast of advertising trends predicts that global advertising expenditure will grow by 4.2% in 2011 to reach $470.8bn with Latin America and Asia Pacific growing at 7.0% and 6.5% respectively. China will become the 3^rd largest advertising market in 2012 and Brazil the 6^th largest. In 2011, television advertising will take a 40.0% share of total advertising spend (up from 38.2% in 2008) and internet advertising will overtake print media to become the No2 advertising medium. Video-rich content will increase its share of online ad spend to a 32.0% share by 2012.

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 For more information:

Merlin

Vanessa Maydon

Zinka Bozovic

0207 726 8400

07802 961 902

07769 255 380

Barclays Private Equity

Christiian Marriott

Steven Silvester

The Mill

Robin Shenfield

Pip Lowe

The Carlyle Group
Rosanna Konarzewski

0207 512 9900

0207 208 8170

0207 208 8181

0207 894 1632

About Barclays Private Equity
• Barclays Private Equity is one of Europe’s leading investors in mid-market buyouts with a successful track record spanning over 25 years, with more than 350 transactions to its name, typically ranging in size from €50m to €300m.
• Established in 1979, it developed a UK regional network in the early nineties and the first European office, Paris, opened in 1990.
• Barclays Private Equity has raised over €5 billion of committed capital and has many of the world’s leading investors amongst its investor base.  It is currently investing the €2.45 billion Barclays Private Equity Fund III which closed in September 2007
• Barclays Private Equity’s portfolio of Europe-wide investments across all its funds under management currently consists of over 50 companies.
For further information, please visit www.bpe.com

 About The Mill
 • The Mill is a leading digital visual effects solutions provider to the advertising industry operating from bases in London, New York and Los Angeles. It designs and crafts creative moving image content for all media platforms including TV, online and mobile.
• The Mill’s client base includes all the major advertising holding companies, Omnicom, WPP, Publicis Groupe and Interpublic.• The Mill won an Academy Award (Oscar) for its work on the Ridley Scott-directed feature film ‘Gladiator’ and a Bafta for its work on the BBC drama Doctor Who.
• The Mill also owns Beam, which offers advertising agencies and brand owners capabilities in workflow management, asset archiving and the distribution of completed TV ads and other content to broadcasters and to other platform owners.
• For further information, please visit www.themill.com

About The Carlyle Group
•The Carlyle Group is a global alternative asset manager with $106.7 billion of assets under management committed to 84 funds as of December 31, 2010.
• Carlyle Europe Technology Partners (CETP) II is a €530 million fund that closed in November 2008.  Since 2002, Carlyle’s European Technology team has acquired and invested in 23 small and medium sized companies, supporting their growth, expansion and business transformation initiatives.
• Carlyle invests across three asset classes - corporate private equity, real assets and global market strategies - in Africa, Asia, Australia, Europe, North America and South America focusing on aerospace & defense, consumer & retail, energy & power, financial services, healthcare, industrial, infrastructure, technology & business services, telecommunications & media and transportation.
• Since 1987, the firm has invested $68.7 billion of equity in 1,035 transactions. The Carlyle Group employs more than 990 people in 19 countries.
• Web: www.carlyle.com; Video: www.youtube.com/OneCarlyle

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