Cineworld to create world's second biggest cinema company following Regal acquisition

US cinema operator Regal Entertainment Group to be bought by UK's Cineworld Group

US cinema operator Regal Entertainment Group to be bought by UK's Cineworld Group

A deal would put the combined company in a better position to take on United States industry leader AMC Entertainment, and also give it more scale to fight growing competition from Netflix, Apple and other digital outlets.

The deal value of $23 per Regal share represents a premium of about 12 percent to Regal's closing price on Monday and implies an enterprise value - equity plus debt - of $5.8 billion. The company's stock had a trading volume of 10,210,000 shares, compared to its average volume of 7,421,647.

Cineworld will receive opportunities for expansion outside Britain a market where spending by consumers is dropping leading up to the exit by the country from the European Union. Movie-theater operators are consolidating to wring out costs and afford reclining chairs and expanded food-and-drink options to entice customers away from their Netflix binges at home.

CEO of Cineworld Mooky Greidinger said that the new group would make the best place to watch movies.

BlackRock Advisors LLC increased its stake in shares of Regal Entertainment Group by 9.9% in the third quarter. The stock is down 19 percent since news of the talks emerged. Many films this year have failed to meet expectations at the box office, and the summer season - usually the most lucrative for the industry - was the worst since 2006.

The Philip Anschutz's Anschutz Corp agreed to provide its consent to support this deal, the only shareholder action by Regal that is required to approve the transaction. Changes it's considering include modernizing Regal's movie theaters and ticketing systems, people familiar with the offer said last week, asking not to be identified as the deliberations were private. Royal Bank Of Canada upgraded shares of Regal Entertainment Group from a sector perform rating to an outperform rating and increased their price objective for the company from $19.00 to $20.00 in a report on Thursday, October 26th.

The deal would be structured as a so-called reverse merger, requiring the approval of Cineworld's shareholders.

Cineworld disclosed on Tuesday morning that a sovereign wealth fund would invest alongside the Greidinger family, the company's biggest shareholder, as part of the fundraising, but did not disclose its identity. "The long-term investment proposition has fundamentally changed as a result of higher debt and earnings becoming heavily dominated by mature markets", the analysts said. State Board of Administration of Florida Retirement System owned about 0.10% of Regal Entertainment Group worth $3,354,000 at the end of the most recent quarter.

US cinema owners have struggled this year as multiple major films flopped.

The UK cinema group will pay $23 a share for Regal. Regal unsuccessfully tried to sell itself in 2014.

Recommended News

We are pleased to provide this opportunity to share information, experiences and observations about what's in the news.
Some of the comments may be reprinted elsewhere in the site or in the newspaper.
Thank you for taking the time to offer your thoughts.