Ron Burkle buys Relativity Media stake from Elliott Management
The supermarket magnate's Yucaipa Cos. investment firm is buying out private equity firm Elliott Management's minority stake in Kavanaugh's independent film studio Relativity Media, confirmed a person who is familiar with the matter but not authorized to discuss it publicly.
The amount of the investment was not immediately available, but knowledgeable people have said that Elliott's stake in Relativity, the financially strained company behind "Immortals" and "Take Me Home Tonight," was worth about $150 million.
Relativity's relationship with Elliott, previously its only investor, has grown troubled in the last year amid management and financial troubles at the studio. The private equity firm, which has $19 billion under management, has been letting Relativity slowly buy down its stake while seeking to exit entirely.
Kavanaugh was previously in talks with JPMorgan Chase & Co. about leading a deal to buy out Elliott.
Last fall, a firm connected to Burkle, Colbeck Capital Management, gave Relativity a much-needed $200 million loan that is helping the studio to complete and release several upcoming movies, including the big-budget Snow White tale "Mirror Mirror," starring Julia Roberts, and "Act of Valor," an action movie featuring Navy SEALs.
Relativity has six movies set to come out by April and no others in production.
The investment is being made by Y Entertainment Group, a new subsidiary of Yucaipa focused on the media business. Its first deal, also announced Thursday, was the acquisition of Artist Group International, a New York concert booking agency.
In 2010, Burkle backed an unsuccessful bid by independent filmmakers Harvey and Bob Weinstein to buy back their film studio Miramax.
Elliott continues to oversee a multibillion-dollar fund to co-finance movies with Universal Pictures in which it is the lead investor. The fund was previously managed by Relativity, but Elliott took back control last spring.
News of the investment was first reported by Bloomberg.
Michael Joe, a former president of Relativity who joined Elliott last March to oversee its entertainment investments, announced yesterday that he was leaving. The veteran entertainment industry executive has not yet landed a new position.
-- Ben Fritz
Photo: Relativity Media CEO Ryan Kavanaugh with actress Kate Bosworth. Credit: Charley Gallay / WireImage