Empire exits
Theatre sale brings Landmark back to former markets.
For Landmark Cinemas, buying 20 theatres from Empire Company Ltd. was a way to return quickly to former markets it vacated over the years in Edmonton and Calgary.
“We feel like we’re going home,” said Neil Campbell, chief operating officer of Calgary-based Landmark.
“Landmark’s been around since 1965; we’ve had theatres in Edmonton for years and we’ve always had an office in Edmonton where we have an equipment company for 40 years that sells everything from popcorn to digital projectors,” Campbell said. “In the old days, we owned the Towne, the Jasper, the Mill Woods drive-in.”
The situation is the same in Calgary, Campbell said.
“We just let go of the last lease we had here at Christmastime for the Globe theatre … and we have our head office here and golly, we don’t even have a theatre here in this town — and now we do.”
After the company pulled out of the Globe Cinema in downtown Calgary, the arthouse theatre was taken over by Riley’s Reproductions and Printing, which owns the building.
Under a deal announced Thursday, Landmark will take over the Empire Studio 16 Country Hills and Empire Theatres Shawnessy in Calgary. In Edmonton, it acquires the Empire City Centre 9 and Empire Clareview 10 Cinemas.
Landmark acquired 20 theatres, including 179 screens, in Ontario and Western Canada for about $55 million, including $31 million in cash, $19 million in equity and an earn out right estimated at about $5 million. An earn out right is basically a provision that pays the seller more in the future if the buyer reaches certain goals.
Upon closing, the assets will be held by a new entity with Empire holding a controlling interest. Landmark manages the business with buyout provisions.
The acquisition will make Landmark the second-largest exhibitor in Canada, behind Cineplex Inc.
Landmark operates 31 theatres, with 125 screens, in 26 small to mid-sized western Canadian markets including Fort McMurray, Banff, Sylvan Lake, Stettler, Airdrie, Edson, Drayton Valley and Grande Prairie.
Its newly acquired Empire theatres will be rebranded over the next year to Landmark, Campbell said. It’s too soon to say what other changes and technological upgrades — such as high-frame-rate equipment to show the latest blockbuster movies — will need to go into the theatres, he said. The company built three theatres last year and plans to develop three more at undisclosed locations soon.
Campbell said privately held Landmark did not want to buy the entire Empire theatre chain, but picked the assets that made sense.
“We bit off as much as we could chew,” he said, adding ATB Financial is a partner in the deal.
A separate agreement has Cineplex buying 24 Empire theatres and 170 screens in Atlantic Canada and two theatres with 48 screens in Ontario for $200 million in cash.
Empire is bowing out of the movie-exhibition business to focus on its grocery business. The Stellarton, N.S.- based company announced a $5.8-billion deal earlier in June to buy all the Canadian properties of rival Safeway Inc.
The theatre deals are both expected to close after regulatory approvals by late summer.
Empire president and CEO Paul Sobey said that selling the theatre business was a difficult choice.
“The decision, however, aligns with the strategic direction of the company to focus our resources on our food retail business through our 100-percent interest in Sobeys Inc. and on our related real estate investment through our 42.8-per-cent ownership interest in Crombie REIT,” Sobey said in a news release.