Chain to buy Regal from Anschutz
The U.K.’s Cineworld Group Plc agreed to buy U.S. theater operator Regal Entertainment Group from Denver-based Anschutz Corp. for about $3.6 billion to expand into the biggest movie market.
The $23-a-share deal comes a week after the companies confirmed news reports of takeover discussions, jolting cinema-operator stocks. The price represents a 26 percent premium to Regal’s close on Nov. 27, the day before discussions became public.
Cineworld will gain opportunities for growth outside Britain, where consumer spending is falling ahead of the country’s exit 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.
“The joint group is going to create the best place to watch a movie,” Cineworld Chief Executive Officer Mooky Greidinger said in an interview Tuesday. Cinemas remain the “key drivers” of the industry, not home entertainment, he said. “The place to premier the big movies is in the cinemas.”
The deal will give the companies $150 million a year in pretax savings and structural synergies, Cineworld estimates. Changes it’s considering include modernizing Regal’s movie theaters and ticketing systems, people familiar with the offer said, asking not to be identified as the deliberations were private.
Billionaire Philip Anschutz’s Anschutz Corp. has agreed to provide its written consent to back the deal, the only Regal shareholder action required to approve the transaction, Cineworld said. Cineworld is funding the deal with debt and equity sold through a rights issue of about 1.7 billion pounds ($2.3 billion).
The offer follows a buying spree by AMC Entertainment Group Inc., the biggest U.S. exhibitor, whose shares have plunged over concerns about its mounting debt.
The deal will bring the number of Cineworld screens to 9,542 in the U.S. and Europe, making it the No. 2 theater chain in the world by that metric, the company said.