Cineworld has announced that it is snapping up its US peer Regal for $3.6bn (£2.7bn), turning the British company into the second largest cinema operator in the world, with over 9,500 screens.
In a statement on Tuesday, Cineworld said that the deal would create a globally diversified cinema operator, spanning ten countries and would allow Cineworld to access the North American cinema market – which is the largest box office market in the world.
The US cinema market has had an industry box office worth in excess of $10bn in each year since 2008 and stable admissions in excess of 1.25 billion in each year over the same period, Cineworld said.
“We have long had high respect for Regal and for its strong position in the largest box office market in the world and we are delighted that the Regal directors have unanimously agreed to recommend our offer to their shareholders,” said Mooky Greindinger, chief executive of Cineworld.
“Consolidation is an important move forward and the best practice we have successfully rolled out across Europe will be the key driver to continued success,” he added.
Amy Miles, CEO of Regal, said that she believes the transaction “provides compelling value for our stockholders”.
“We believe this partnership with Cineworld will enhance Regal’s ability to deliver a premium movie-going experience for customers and further build upon our strategy of introducing innovative concepts and premium amenities designed to enhance the value of our theatre assets,” she said.
Cineworld was founded in 1995. It was originally a private company but re-registered as a public company in May 2006 and listed on the London Stock Exchange in May 2007.
It’s the only publicly listed cinema business in the UK.
On Tuesday it said that it expects the deal to be “strongly accretive to earnings” in the first full year following completion of the transaction, which will be 2019.
The deal will be funded by a rights issue, which will raise approximately £1.7bn, and a debt issue.
Because of the size of the acquisition, Cineworld said that it will be classed as a reverse takeover under the listing rules of the Financial Conduct Authority. As such it will be conditional on the approval of Cineworld’s shareholders at a general meeting which is expected to take place in February next year.
Cineworld added, however, that board intends to unanimously recommend the deal. The directors of Cineworld also intend to vote in favour of it, the group added.
Separately, Cineworld said that the Anschutz Corporation, which controls about 67 per cent of the voting rights in Regal, has agreed to provide its written consent to approve the takeover.