UK cinema operator, Cineworld Group Plc, has agreed to buy US theatre operator, Regal Entertainment Group, in an estimated $3.6 billion deal. The merged company will operate in ten countries, and have almost ten thousand screens across the US and Europe.
The merger will see Regal stockholders receive $23 in cash for each share of Class A and Class B commons stock.
“The joint group is going to create the best place to watch a movie,” said Mooky Greidinger, Cineworld’s Chief Executive Officer.
Cineworld has opted to look outwards after Britain’s decision to exit the European Union, resulting in lower consumer spending. The new company will strive to steer people away from streaming services such as Netflix, with improved services and offers. As Greidinger states, “the place to premiere the big movies is in the cinemas”.
The cinema operator has been renovating its movies theaters in the UK as well as in Europe and Israel to offer “top-class facilities”. According to Greidinger, these improvements include wider seats, a variety of food offerings, bigger screens, and better sound systems.
Company shares fell 3.7 percent to 526 pence at 9:34 in London, with an estimated 7 percent loss this year. The stock was down 19 percent when news of the talks emerged.
According to Cineworld, the deal with Regal Entertainment Group will give the companies $150 million a year in pretax savings and structural synergies. The company aims to modernize Regal’s movie theaters and ticketing systems, said several anonymous sources.
Regal Entertainment Group’s shareholder, Anschutz Corp has agreed to the deal. Cineworld is funding the transaction with debt and equity sold through a rights issue of about $2.3 billion.
Once the deal is complete, Cineworld will become the second largest theatre chain in the world, according to the company’s statement. Regal tried to sell itself in 2014, however, they did not receive any suitable offers.
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