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Regal Cinemas Agrees to $3.6 Billion Purchase by U.K.'s Cineworld

5 Dec, 2017 By: Erik Gruenwedel

Regal Cinemas, the nation’s No. 2 theatrical chain, Dec. 5 said it has entered into a $3.6 billion “definitive” merger agreement with London-based Cineworld Group.

Under the deal, Regal stockholders would receive $23 in cash for each share of common stock, for a total transaction value of $5.9 billion, which includes outstanding debt. The offer represents a 43.2% premium over Regal’s share price of $16.06.

Knoxville, Tenn.-based Regal Entertainment Group operates 7,315 screens across 561 theatres in 43 states along with Guam, Saipan, American Samoa and the District of Columbia. It is majority-owned by Anschutz Corp., which supports the sale.

Cineworld is reportedly the No. 2 theatrical chain in Europe, operating 2,049 screens in 221 theaters in nine countries.

The merger would rank the combined chains just behind No.1 theater operator AMC Entertainment.

“We believe the transaction … provides compelling value for our stockholders,” Regal CEO Amy Miles said in a statement.

The pact includes a “go shop” provision, which allows Regal — through Jan. 22, 2018 — to actively solicit, evaluate and potentially enter into negotiations with third parties that offer competing or superior offers.

The transaction comes as domestic theater operators contend with a challenged business model, including premium video-on-demand and subscription video streaming — the latter spearheaded by Netflix. The SVOD pioneer has upped feature film production with a mandate to simultaneously release movies in theaters and online globally.

Miles said the combined chains would seek to introduce innovative concepts (in-theater retail) and premium amenities (in-seat dining) designed to enhance the value of their theatre assets.

Indeed, AMC Theatres plans to begin selling physical and digital movies on its website in 2018.

Mooky Greidinger, CEO of Cineworld, said management teams at both companies would help implement its “best-place-to-watch-a-movie” strategy in theaters.

“Consolidation is an important move forward and the best practices we have successfully rolled out across Europe will be the key driver to continued success,” Greidinger said.

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